Building With Inworld—The Character Engine for AI NPCs

The leading AI startup in gaming raises more than $50M at a $500M+ valuation following a series of AAA game integrations, partnerships, and community mods across Unity, Unreal Engine, NetEase, Niantic, Elder Scrolls V: Skyrim, GTA V, Roblox, and Minecraft.

Inworld AI has raised over $100M to date with support from Lightspeed, Stanford University, Microsoft’s M12, Intel, Samsung, Meta, Disney Accelerator, Section 32, Eric Schmidt, Founders Fund, Kleiner Perkins, CRV, BITKRAFT, and many others.

An Unusual Beginning: Fjaðrárgljúfur in Kirkjubæjarklaustur

It’s my second time investing in Inworld AI, which, in itself, speaks to the level of conviction. But today, it’s not just me; we’re putting the entire Lightspeed platform behind CEO Ilya, CPO Kylan, CTO Michael, and their team.

The first time, it took a mere 48 hours from meeting the team—who pioneered conversational AI platforms and generative models at Google and DeepMind—to signing the term sheet.

That was on Christmas Day of 2021, while traveling remotely in the Icelandic town of Kirkjubæjarklaustur: a 500-soul village known for the spectacular nearby Fjaðrárgljúfur canyon. Thank you, Docusign.

Fjaðrárgljúfur — One of many reasons to explore the stunning natural beauty of Iceland.

Fast Forward to 2023: Inflection Point

About two years later, after many Inworld product and feature releases, the conviction has only grown stronger.

Stack-ranking the 200+ investable opportunities at the intersection of gaming and AI—based on upside, team caliber, product velocity, and traction—Inworld simply stands out: while everyone is circling and seeking to capitalize on the ‘new world order,’ Inworld AI is uniquely positioned to seize an outsized opportunity.

Congratulations from the NASDAQ Tower in Times Square — Today, Inworld AI stands as the best-funded AI startup in gaming.

The Character Engine for AI NPCs

Inworld’s vision of the future of video games is fascinating, and yet, so familiar: in the physical world, the quality of our experiences typically isn’t defined by where we are as much as by whom we are with. The same is true for virtual worlds: engaging experiences with friends and strangers outweigh the importance of graphical fidelity.

Yet, almost all game developer tools are primarily concerned with creating visual fidelity and environments—instead of lifelike non-player characters (NPCs) and generative agents that go far beyond pre-programmed decision trees and limited narrative choices.

Inworld focuses on immersive characters and game logic: the company’s Character Engine uses advanced AI to build generative NPCs whose personalities, thoughts, memories, and behaviors are designed to mimic the deeply social nature of human interaction. And the company’s developer tools integrate with existing solutions that create environments and graphics.

In other words, in what presents a “platform shift”-grade opportunity, Inworld has established itself as the leading “AI-first” game-development engine, enabling the creation of previously impossible experiences.

Building a Character Engine — While Unreal and Unity focus on environments and visuals, Inworld focuses on characters and logic.

The company’s suite of tools is integrated in the industry’s most popular engines, and is featured in Unity’s new AI Marketplace as a Unity Verified Solution. Last October, Inworld also received an Epic MegaGrant, joining a community of creative, noteworthy, and innovative projects built around Unreal Engine.

Players Agree: It’s Time for Unprecedented Immersion

The next generation of games will be judged by how immersive the experiences feel. Inworld’s Character Engine offers a transformational shift that brings characters to life with realistic emotions and dialogue, adding richness to the stories and worlds they occupy. Populating experiences with characters that behave with convincing real-time responses and actions will play a substantial role in getting us to the promise of truly interactive entertainment.

According to the Future of NPCs, a report that surveyed over 1,000 US gamers, 99% of gamers believe advanced AI NPCs would positively impact gameplay. 78% of gamers would spend more time playing, and 81% of gamers would be willing to pay more for a game with advanced AI NPCs.

Player Demand and Willingness to Pay — Inworld study on the future of NPCs finds 99% of gamers think AI will enhance gameplay.

Far Beyond Chatbots and LLMs

In order to accomplish its lofty vision, Inworld’s technology and experiences go far beyond existing large language models (LLMs): the company supports multimodal character expression by orchestrating multiple machine-learning models that are designed to mimic the full range of human communication.

Unlike chatbots (like GPT or other AI conversation platforms), the platform allows developers to link Inworld’s character brains to their animation and rigging systems, including in 3D environments. Thanks to Inworld’s Character Bain and Contextual Mesh design paradigms, smart NPCs can learn and adapt, navigate relationships with emotional intelligence, have memory and recall, and are capable of autonomously initiating goals, performing actions, and following their own motivations that can drive the narrative and integrate with the broader player experience.

Integration with 3D Environments — Inworld AI can export into Unreal Engine, Unity, Roblox, or Minecraft, among others.

Novel Experiences, Not Incremental Improvements

Last week at Lightspeed, we published our perspectives on the intersection of gaming and artificial intelligence in a longer article featuring a comprehensive market map of the ecosystem.

The (inevitably incomplete) Gaming x AI Market Map — A snapshot of the gaming market across game development models from the hardware to the ecosystem layer. Write to us to let us know what we are missing.

Historically speaking, in platform shifts like artificial intelligence, generational companies won’t only incrementally improve upon existing workflows with faster, better, or cheaper tools; they will create completely novel, previously impossible user experiences.

As an example for the last platform shift—the mass-consumer introduction of the smartphone around 2007— Zynga’s rise through mobile, casual gaming modalities and Rovio’s innovations in tactile touchscreen experiences are great examples from the gaming world, where a newcomer capitalized on a new reality of consumer experiences despite the incumbents’ (in this case, Electronic Arts or Activision) perceived resource advantage. It’s a textbook example of the Innovator’s Dilemma, caused by corporate inertia.

We expect the shift to artificial intelligence and procedural generation will be no different. Those unable to deliver these new experiences in their games will be left behind as audiences will continue to prefer the most immersive experiences. Much of what seems like a fever dream from academia today will be considered table stakes in a matter of years, not decades.

AAA Games and Community Mods

In addition to countless indie development projects in progress, the new investment comes on the back of the Inworld’s launch with a range of AAA integration partners. These include AI NPC experiences with Team Miaozi (NetEase Games), Niantic 8th Wall, LG UPlus, Alpine Electronics, and in community-created mods of Skyrim, Stardew Valley, and Grand Theft Auto V.

At the 2022 Disney Accelerator Demo Day, Inworld demonstrated a ‘Droid Maker’ prototype that the company created in collaboration with ILM Immersive. More demos are available at inworld.ai/experiences.

Inworld AI Experience Showcases with NetEase, Niantic, Elder Scrolls, GTA V, Roblox, Minecraft, and many more — Game developers can create rich characters with deep personalities and motivations in Inworld Studio.

Below are some examples of the Character Engine in action.


Intelligent Worlds and Characters — Inworld AI’s “Origins” is a glimpse into the future of AI-driven video games. Players take on the role of a detective in a neo-noir world filled with intelligent NPCs. Learn more.

A Completely New Player Experience — Using nothing but microphones and their creativity, players are tasked with questioning witnesses, uncovering the narrative, and cracking the case.

Droid Maker (Disney Accelerator Demo Day)

Inworld AI x ILM Immersive — Bringing droids to life in a prototype. Learn more.

Niantic & 8th Wall

Inworld AI x Niantic — Building an interactive augmented-reality learning experience about the 2,000-year-old redwood trees in Muir Woods. Learn more.

LG UPlus

Inworld AI x LG — Teaching kids English with AI tutors in LG U+’s Kidstopia. Learn more.

NetEase Games

Inworld AI x NetEase — Full AI-controlled NPCs responding in real-time in a fully playable game.

Stardew Valley

Inworld AI x Stardew Valley — AI Villagers powered by the Character Engine. Learn more.

The Elder Scrolls V: Skyrim

Inworld AI x Skyrim — An early glimpse into the future of open-world RPGs.

Backed by Top-Tier Investors

Financial supporters include Lightspeed, Section 32, Intel, Founders Fund, Microsoft’s M12, BITKRAFT, First Spark (Eric Schmidt), The Venture Reality Fund, Kleiner Perkins, CRV, Stanford University, Meta, Micron Ventures, LG Technology Ventures, Samsung Next, NTT Docomo Ventures, and SK Telecom Venture Capital, among others. The company was also chosen in the 2022 Disney Accelerator program.

Selected financial and strategic investors of Inworld — With over $100 million in total funding, the company is now the best-funded startup at the intersection of AI and gaming.

The company’s advisors include Neal Stephenson (award-winning writer and futurist who first coined the term “Metaverse”), Danny Lange (AI visionary and vice president at Google; formerly at Unity and Uber), and Jon Snoddy (immersive entertainment pioneer and former senior vice president of research and development at Walt Disney Imagineering).

What’s Next: Opportunities for Developers

Inworld will use the funding to accelerate research and development, hire top talent, invest in infrastructure, and launch an open-source version of its Character Engine. Inworld’s commitment to open source is a testament to the company’s belief that collaboration fuels innovation. By working in tandem with the developer community, Inworld is planning to push forward innovations in generative AI that elevate the entire gaming industry. Developers can learn more at inworld.ai/open-source.

You can also sign up and play around with the Character Engine.

For more information, including open positions at the company, please visit inworld.ai and follow the company on Twitter and YouTube and join the Inworld AI community on Discord.

About Lightspeed Gaming

Lightspeed Venture Partners is a global venture capital firm with over $29 billion in capital under management and more than 500 investments across the U.S., Europe, and Asia—including Epic Games, Stability AI, and Snap. Over the past two decades, the firm has backed hundreds of exceptional entrepreneurs and helped build and scale companies to achieve 190 IPOs and acquisitions.

To date, Lightspeed has invested over $350 million into the gaming industry—including with many founders who have led the creation of games like Fortnite, Call of Duty, League of Legends, Wild Rift, Apex Legends, Overwatch, Valorant, StarCraft II, and Warcraft III. For more information, visit gaming.lsvp.com.

Epilogue: The Infinite Power of Play

For half a century, video games have profoundly shaped consumer behavior and acted as a catalyst for significant technological innovation. With the advent of the ‘Metaverse,’ and as an ever-increasing time of our lives is spent in immersive virtual worlds, gaming is expected to continue its pivotal role in how we play, work, and connect.

Many life-changing technologies were born in gaming, in part because (1) interactive experiences are often pushing the boundaries of what’s technologically possible and (2) play and innovation are inevitably intertwined: play is “safe exploration,” and work is “exploitation of learned patterns,” not too indifferent of how some of AI works. The best-scaled example of cross-sector breakthroughs that originated in gaming is probably NVIDIA: originally built to perform complex 3D calculations in video games, now our most powerful computational engine and the backbone of all AI, blockchain, and so much more. We believe Inworld could be the next generational gaming company.

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