Fei-Fei Li’s World Labs in Talks for Fundraising at $5B Valuation

The “godmother of AI” is open to offers she can’t refuse.

Silicon Valley is preparing for another high-profile AI fundraising, as Fei-Fei Li is reportedly in talks to raise fresh investment that would value her start-up World Labs at $5 billion.

Sources spoke to Bloomberg about the potential deal. It signals growing investor appetite for AI companies working beyond text and images and into what some see as the next frontier: systems capable of understanding and operating inside three-dimensional environments.

If agreed, the funding round would mark a significant step up from World Labs’ earlier valuation and could position the company as one of the most valuable emerging AI start-ups focused on spatial intelligence.

From ImageNet to the next AI frontier

Li is widely recognised as one of the most influential researchers in computer vision and machine learning. While the industry has often spotlighted so-called “godfathers of AI” — Geoffrey Hinton, Yann LeCun, and Yoshua Bengio, who won the 2018 Turing Award — Li has carved out her own legacy, most notably through her groundbreaking work on ImageNet.

ImageNet, which helped accelerate modern computer vision progress, is often credited as a key driver behind today’s AI boom. That track record has made Li both a scientific figurehead and a prominent voice in debates around how AI should be developed and deployed, particularly when it comes to safety, responsibility and real-world applications.

Her involvement in World Labs therefore carries weight beyond the usual start-up narrative: for investors and technologists alike, it suggests a company built on deep academic credibility as well as commercial ambition.

World Labs’ rapid rise

World Labs emerged from stealth in 2024 and quickly gained traction, securing a multimillion-dollar investment round that valued the business at around $1 billion.

That initial funding included a roster of major backers such as Andreessen Horowitz, Nvidia’s venture arm, and Radical Ventures — a notable firm in AI investing, where Li is also a scientific partner.

A jump from $1 billion to $5 billion in roughly a year reflects both the intense competition for frontier AI deals and the premium investors are placing on companies believed to have the potential to shape the next platform shift. It also highlights how quickly valuations can move in the AI sector, even before companies have widely scaled commercial products.

However, the reported discussions also underline how difficult it can be to separate hype from true technological advantage. For World Labs, the big question is whether spatial intelligence and “large world models” will become as foundational to future applications as large language models are today.

What is “spatial intelligence” — and why it matters

World Labs describes itself as a “spatial intelligence company, building frontier models that can perceive, generate, reason and interact with the 3D world”. It describes its AI products as “large world models.”

That framing points to a shift in AI development: moving from systems that primarily process language and images to systems designed to understand space, physics, and persistence — essentially, the properties required for AI to work inside immersive digital environments or to guide robots and autonomous systems in the physical world.

If successful, the implications could be significant. Spatial AI has potential applications in robotics, industrial automation, simulation and training, design and engineering, and next-generation entertainment and gaming. It could also play a role in emerging AR and VR experiences, where AI-generated worlds and objects need to remain consistent and interactive over time.

The rise of these models could introduce new competitive dynamics as well. Companies working on spatial reasoning and 3D interaction may become strategically important partners — or acquisition targets — for major cloud providers, chipmakers, and consumer tech platforms.

Marble product launch and notable backers

In late 2025, World Labs launched its first product, Marble, which “lets you create, edit and share high-fidelity, persistent 3D worlds.”

The emphasis on persistent 3D worlds suggests a focus on long-term, interactive environments that evolve and remain stable, rather than one-off AI-generated scenes. If Marble gains traction, it could indicate demand for AI tools that go beyond generating static content and instead support continuous world-building — potentially appealing to creative industries, developers, and enterprise simulation users.

World Labs has also attracted high-profile private investors, including Hinton, actor and investor Ashton Kutcher, and Google DeepMind chief scientist Jeff Dean.

Those names matter not just for publicity but also for signalling. Having respected AI leaders such as Hinton and Dean associated with the company can reinforce confidence that World Labs is tackling hard technical challenges with credible expertise — and may help attract both talent and further funding.

Signal for AI markets

If World Labs secures the raise at a $5 billion valuation, it would reinforce a broader trend: investor belief that AI is entering a new stage where the “next big winners” may be companies building new model types and platforms, not just chatbots or productivity tools.

It also suggests that frontier AI investing is shifting toward bets on foundational technologies that could underpin entire ecosystems, rather than narrow applications.

At the same time, the reported valuation leap will raise expectations. Investors will likely want to see how World Labs can translate its scientific ambition into clear commercial adoption — and whether “large world models” can become a core building block for the next generation of AI-driven products.

Japan-based Sakana AI has announced a new partnership with Google that includes a financial investment from the tech giant.

The post Fei-Fei Li’s World Labs in Talks for Fundraising at $5B Valuation appeared first on eWEEK.