• Translation startup DeepL is closing in on a new funding round led by US giant IVP, sources say.
  • The German company, founded in 2017, aims to unseat Google as the dominant force in translation.
  • DeepL previously sold a portion of its business to US investor Benchmark.

A German startup that wants to unseat Google as the dominant force in translation services is closing in on a funding round of $100 million or higher led by Silicon Valley investing giant IVP, Insider understands.

Cologne-based DeepL offers translations across a number of European and Asian languages. Like Google Translate, DeepL offers a free translation service powered by artificial intelligence. The service was originally formed out of online dictionary Linguee in 2016 and bills its translations as more nuanced and more capable of capturing the spirit of words.

Up until 2019, DeepL was run by Linguee founder and ex-Google research scientist Gereon Frahling. The startup is now run by ex-Linguee chief technology officer Jaroslaw Kutylowski.

IVP, which has previously backed the likes of Uber, Slack, Netflix, and Insider, has led a sizeable new round into the German business, according to five sources familiar with the matter. The deal values DeepL at around $900 million, two sources said. Another source said the deal valued the startup at around $1 billion.

Two sources said the firm could raise $150 million or higher.

US fund Bessemer and leading European fund Atomico are also thought to have joined the round, one London-based source said.

The deal is not yet final and details around valuation and the amount raised may change.

DeepL, IVP, Bessemer, and Atomico did not respond to requests for comment.

A small test run by Insider indicates that DeepL is, at least in some cases, more intuitive than Google.

Inspired by Hacker News, we entered the deliberately confusing phrase "fruit flies like a banana." into both translation tools to translate from English to French. Google translated the phrase literally, meaning it didn't make sense, while DeepL translated correctly.

Google's translation:

DeepL translation
Insider

DeepL's translation:

Google translation
Insider

The startup employs around 359 people primarily in Germany, according to LinkedIn data.

DeepL previously sold a 13.6% portion of its business to US fund Benchmark and Btov Partners in 2018, according to reporting by Slator. The company has expanded beyond its initial scope of focusing on European languages and has branched into major Asian languages like Korean, Japanese, and Chinese.

The company has also moved on from a focus on advertising-based direct-to-consumer revenues and is instead focusing increasingly on higher-ticket enterprise customers, working with clients like Fujitsu, Rakuten, and Deutsche Bahn, according to Slator. 

Financial reports, cited by Slator, indicate that the company has been revenue generating for a number of years but DeepL's new cash injection could signal an acceleration in its growth plans.

DeepL's services range from its free consumer-facing offering to a tiered payment system that ranges from 5.99 euros per month to 39.99 euros per month.