German carmaker Mercedes-Benz has invested US$7 million in Soul Machines, an artificial intelligence (AI) research company spun out of the University of Auckland and run by the Oscar-winning Weta digital animations wizard Dr Mark Sagar (Avatar, King Kong, Spider-Man 2, among others).

Soul Machines focuses on making realistic ‘digital humans’ – animated avatars which look and sound like real people. The University of Auckland’s commercialisation arm UniServices also joined the latest Soul Machines fund-raising round, injecting US$2 million. 

Soul Machines’ chief business officer Greg Cross said the firm was seeking to raise about US$20 million, with Mercedes-Benz chipping in its NZ$10.7 million through a convertible note earlier this month. UniServices, an initial shareholder in the firm, invested as part of a wider US$8 million offer. Soul Machines raised another US$5 million in June from two existing investors. 

The AI research firm had 12 staff when it emerged out of University of Auckland research in 2016 and has since grown to 87. It has sales offices in Melbourne, San Francisco, New York and London, and Cross said it will be opening an office in Asia in the next month. The majority of its research team is Auckland-based, although other specialists are scattered around the world, he said. 

Sagar, a former portrait artist and medical researcher, and now Soul Machines’ chief executive, is probably best known for his Oscar-awarded digital animation work in films like Avatar and King Kong. He is also the creator of the uncomfortably-realistic BabyX avatar, a 3D digital rendering of a baby based on images of Sagar’s own daughter aged around 18 months. BabyX smiled if you were nice to her, cried if you weren’t, learned from her “dad”, even played the piano. A reverse-engineered, on-screen, digital human.

Soul Machines is Sagar’s bid to commercialise BabyX by making making virtual assistants that look like real assistants, digital customer service people that can really interact with customers. 

Cross says the Mercedes-Benz investment is a “huge endorsement” of the artificial intelligence business. 

“Our objective is to solve problems, deliver solutions, and build scalable markets. We have a very strong focus on that,” he said. “The industries we tend to focus on are the ones that understand the huge amount of change coming at them.” 

Soul Machines differs from other AI research companies in that it has developed cognitive models to simulate human thought processes exemplified by its emotionally responsive digital avatars. That differs from deep learning AI, where a network of processes are built to replicate a brain in the way it analyses data, Cross says. 

He believes cognitive models are going to be a central element of the wider AI standard. Because the technology gets smarter the more it’s used, Soul Machines expects its value will track that trend, with Cross pointing to DeepMind and Siri as examples. 

“We have no question in our minds that we have that potential to be valued as some of those $1 billion-plus companies,” he said. 

UniServices owns 15 percent of Soul Machines and made the investment through its $20 million Inventors Fund, chief executive Andy Shenk says. “[Soul Machines] has world-leading, deeply transformative IP, with a long-term vision that will require patient capital to, potentially, deliver superior returns in the long run.”

Nikki Mandow was Newsroom's business editor and the 2021 Voyager Media Awards Business Journalist of the Year @NikkiMandow.

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