Hyper, an iPhone-based, VTuber-friendly avatar platform, raises $3.6M from Amazon and others

The most popular VTubers, online personalities who use motion-capture-powered manga- and anime-inspired avatars to interact with the world alongside games, over YouTube, and elsewhere, have hundreds of millions of hours of viewership per month, loyal fan bases, lucrative sponsorships, and demand for more.

Big tech appears to be taking notice. Amazon and other major content and avatar creators have invested in Hyper, a startup that has developed technology to make avatar creation and use easier and cheaper.

The backers indicate interesting traction, but the company has not disclosed usage figures. Two Sigma Ventures is leading the $3.6 million seed round, which includes MakersFund, Twitch owner Amazon’s Alexa Fund, Trevor McFedries, founder of Brud, Inc. (creator of Lil Miquela), Robin Raskza, CEO and founder of Facemoji (avatar platform acquired by Google), and Dan Romero, CEO and founder of social media platform Farcaster.

10,000 VTubers were online in 2020. That is just a fraction of the 15 million Twitch streamers with an audience of around 1 billion users, let alone the tens of millions of creators on YouTube, Instagram, TikTok, and other long tail new media platforms.

Hyper believes it can create a new demand for VTuber-style avatars on these platforms by replacing a complicated set-up of motion capture suits, expensive computer and camera equipment, software, and bandwidth overhead with an iPhone and an app.

“We want to be the largest avatar company in the world, and we think we could do it,” Hyper CEO and founder Aaron Ng said in an interview.

Hyper, a Winter ’21 Y Combinator incubatee from San Francisco, is using this funding to expand its business and develop avatar-based products.

The first step is avatar AI assistants.

Hyper AI, its latest feature, lets users create AI-based characters that look like Hyper’s other VTuber avatars. They can be used as personal chatbots, storytelling characters that appear alongside a VTuber avatar, or simply to drive activity when the human VTuber wants to take a break but fans don’t.

Hyper AI characters are powered by generative AI built on OpenAI’s GPT and customized by Hyper to respond to natural language questions and comments, unlike VTuber avatars. Ng said OpenAI’s APIs were the most useful and accessible, but the startup would likely work with others.

“We think creating multiple large language models is good for storytelling,” Ng said. “They can compete and we’ll use what’s best for interaction. We’re unattached.”

Ng said this is the next step if VTuber avatars are about storytelling for fans.

“This is a new world of storytelling where people can interact with these characters,” he said. “It is close to our original mission.”

Amazon seems to want to invest in storytelling and new character-building methods.

Amazon has used the Alexa Fund to fund startups outside the Echo/Alexa voice AI ecosystem. Paul Bernard of Alexa Fund told earlier this year that new media and content have been a recent focus.

Synthetic media, virtualization, metaverse, and creator economy. As a new portfolio value proposition, we’re working more with Amazon’s media division,” he said. Amazon services are forward-leaning. These firsts have never been done before. It’s a strategic fund that bets on emerging technology that may be relevant to our devices or media businesses.

Hyper’s tools could be integrated into Twitch, used to build characters based on Amazon’s content IP, or used elsewhere on Amazon’s platforms.

Amazon may have in mind the “synthetic influencer” platform Superplastic, another Alexa Fund startup: There, Superplastic characters will form a media empire. Amazon could take Hyper that way too.

“We are excited to work with Amazon because of its large IP,” Ng said.

Meanwhile, Apple’s Vision Pro headset will change consumers’ expectations of digital interaction, opening up new opportunities for companies creating digitally native content and the tools to create more of it.

Dan Abelon, Partner at Two Sigma Ventures, said Hyper Online could accelerate and expand content creation. Hyper is committed to providing the best mobile tools for this new format because creators want simple solutions.