Naver Bets on AI Assistant Rival to Meta’s Muse

Stepping Up Investments in Global AI Companies

Backs U.S. Upstart Instinct

100,000 Users, $10 Billion Valuation

Also Invests in AI Music Generator Suno

Seeking New Business Models Through AI Bets

Naver has invested in Instinct, an artificial intelligence assistant startup emerging as a rival to Meta’s Muse, as well as AI music-generation company Suno. With AI moving deeper into everyday activities from shopping and reservations to creative work, the South Korean internet company appears to be betting on global AI firms that could capture the next major user touchpoints.

According to industry officials on October 21, Naver Ventures, the company’s US investment arm, participated in Instinct’s Series B round in late August. The round, jointly led by venture capital firms Index Ventures and Benchmark, raised $250 million. That came just three weeks after Instinct secured $75 million in a Series A round in early August. Naver did not disclose the size of its investment.

Founded in Silicon Valley last year, Instinct develops a personal AI assistant that can handle tasks such as booking flights, ordering groceries and canceling subscriptions through text or voice commands. The service is invitation-only, but had more than 100,000 users as of mid-September, highlighting its popularity in the US. As it has emerged as a competitor to Meta’s Muse, its valuation jumped fourfold in a month to $10 billion at the end of September from $2.5 billion in August.

Naver Ventures also invested indirectly in Suno’s Series D round in May through a US venture capital fund. Suno offers an AI service that generates full songs, including vocals and accompaniment, based on prompts such as lyrics and genre. As of February, it had 100 million cumulative users and 2 million paid subscribers. Its annual recurring revenue reached $300 million this year, making it a leading example of an AI music-generation company turning the technology into a viable business.

Naver has been expanding its ties with the two companies because AI has the potential to reshape the role of traditional internet platforms. If consumers hand the entire process to an AI assistant instead of browsing search results and buying products on shopping sites, control over linking users to transactions could shift from portals to AI services. AI is also changing how content is produced and consumed. For Naver, whose core businesses are search, shopping and content, that presents both a new growth opportunity and a potential threat to its existing operations.

The market is growing as well. Global Market Insights projects the global AI-as-a-service market will expand roughly 14-fold to $178.7 billion by 2034 from $12.7 billion in 2024.

Naver is developing its own AI models and upgrading its search and shopping services while also investing in promising overseas companies to explore new business models. Naver Ventures, at the center of that strategy, was established in June last year and has expanded its portfolio to 11 companies in about a year and a half. Its investments include consumer services such as Instinct and Suno, enterprise AI agent developers Encharge and Netomi, AI model company Anthropic, and AI chip company Positron AI. The portfolio spans everything from AI infrastructure to end-user services.

“Because it remains unclear what form the defining services of the AI era will ultimately take, the strategy appears to be aimed at broadening Naver’s options through external investments,” an industry official said.

Ahn Jung-hoon, Hankyung.com reporter ajh6321@hankyung.com