Soul Machines, the Auckland-based maker of virtual humans used for customer service, such as Air NZ's "Sophie", ANZ's "Jamie" and Mercedes-Benz' "Sarah", says it has closed another big funding round - this time US$40 million ($57m).

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And although Budget 2019 saw the Government give our Super Fund a shove to put $240m into the local startup scene, which has been relatively starved of venture capital, the Soul Machines round was led by Singapore's sovereign fund, Temasek.

"Sam" - one of the artificially-intelligent avatars created by Auckland's Soul Machines. Image / Supplied

The US$40m Series B round was also supported by European venture capital outfit Lakestar and Salesforce Ventures, the VC wing of American customer relations management (CRM) giant Salesforce.


This is not the first time that big names have been attracted to Soul Machines. A US$20m ($28.5m) Series A round in 2018 saw Mercedes-Benz maker Daimler AG - also an anchor customer - chip in US$7m for what is today a 6 per cent stake. That round was also supported by Horizon Ventures, an early backer of Siri before it was sold to Apple.

Soul Machines makes artificially intelligent avatars who can read emotions and answer customer queries.

SK II's AI social media influencer "Yumi", created by NZ's Soul Machines. /Supplied

Cross told the Herald the funds would be used, in part, to put more sales staff on the ground in the US, and Japan where it has landed a major contract with the local division of Procter & Gamble.

The co-founder said there were no IPO plans. The next fund-raising step would be a Series C round, which would likely take place within 12 months.

Baby steps

Soul Machines was founded by Auckland University bioengineering professor Mark Sagar (the "Baby X" creator who picked up an Academy Award for work on blockbusters such as Avatar while working as a special projects supervisor at Weta Digital) and entrepreneur Greg Cross in 2016.

Auckland University's commercialisation arm, Uniservices, was an early backer.

Soul Machines cofounder Greg Cross. Photo / Supplied
Soul Machines cofounder Greg Cross. Photo / Supplied

Earlier, Cross described himself and Sagar as partners in Soul Machines.

He told the Herald he handled the business side while the academic took care of the technology.


Cross was also chairman of another Auckland University spin-out, wireless charging company Power-by-Proxi - bought by Apple in 2017 a $100m+ deal.

Samsung savaged

While virtual assistants have become a dime a dozen, Soul Machines - one of the earliest entrants - maintains it has a lead over the pack.

The Samsung-backed Neon demonstrated some very realistic-looking on-screen humans at CES 2020 this week.

But one high-profile member of the local venture capital community, Andy Lark (often seen with Cross at Morgo industry events), savaged Neon in a blog post.

"Soul Machines has been at it for over seven years - researching neuroscience, developmental psychology and cognitive science to the create the world's first digital brain," Lark wrote.

Soul Machines co-founder Prof Mark Sagar is the tech brain the company, while Cross takes care of the business side. Photo / Supplied
Soul Machines co-founder Prof Mark Sagar is the tech brain the company, while Cross takes care of the business side. Photo / Supplied

The ex-Dell, Xero and CommBank executive said Neon's virtual human seemed "scripted". He said many virtual humans doing the rounds on YouTube seemed like nothing more than "digital puppets" that could be dismissed as "vaporware".


"To autonomously animate digital characters in a hyper-realistic human-like way, they need a brain. So that in the same way we as people use our human brain to interact, behave, engage with others and learn, Soul Machines digital people use a proprietary digital brain to do exactly the same things," Lark said.

Sexist startup?

Earlier, Soul Machines was savaged by Newstalk ZB's Mike Hosking, who reeled off the names of various avatars created by the Auckland startup before adding, "Do you spot the problem? They're all women."

"We have created male digital assistants," Cross said, pointing out "Will", an AI commissioned by Vector.

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The age, sex and other facets of an avatar are ultimately a decision for clients, Cross said.

But he added, "As time goes by I think it will evolve and customers will get to choose if they talk to a male or female or someone of the same ethnicity."