[Edaily Marketin Song Seung-Hyeon Reporter] Of its 1 million cumulative subscribers, 67% are international users. The breakdown is 16% from the U.S., 9% from Japan, 6% from Mexico, and 5% from Taiwan. An AI chatbot service created by a Korean startup is being used more widely overseas than in Korea. This is the story of WarpSpace, the company behind Caveduck.

According to the venture capital (VC) industry on the 12th, WarpSpace secured a Series A investment of 4.3 billion won led by ID Ventures. Kona Venture Partners, Maple Investment Partners, and Paramount Investment participated jointly.

WarpSpace was founded in June 2023. It is led by CEO Kim Young-bin and is headquartered at the Seoul AI Hub in Seocho-gu, Seoul. The company has 17 employees, 9 of whom are developers. CaveDuck is a platform where users can create their own AI characters and converse with them. By setting a character’s personality, appearance, and backstory, the AI generates consistent speech patterns and emotional responses tailored to that persona. No coding knowledge is required. The company simultaneously launched Android and iOS apps in October 2024 and also operates a web version.

A key point to note is its revenue model. Users engage in free conversations using “Feathers,” a basic in-app currency distributed daily; once they run out, they can purchase “Wings,” a premium currency, or subscribe to a monthly membership. A portion of the revenue generated from these transactions is paid out to the users who created the characters. This structure is similar to YouTube’s revenue-sharing model. Currently, over 10,000 creators are active each month, and the number of public characters has surpassed 110,000. Monthly chat volume stands at 30 million messages, with cumulative chats reaching 400 million.

This structure was the key basis for the investment decision. Park Seong-yong, Team Leader at ID Ventures, who led the investment, commented, “CaveDuck operates on a revenue-sharing model with creators, similar to YouTube,” adding, “The key to this business ultimately lies in securing as much high-quality content as possible, and I was impressed by how they addressed this through a virtuous cycle.” He continued, “We judged that the scalability is even greater given that over half of the users are from overseas.”

The growth pace is rapid. The number of subscribers, which stood at 300,000 in August 2024, surpassed 1 million in just over a year. In 2024, the company posted revenue of 2.4 billion won and an operating profit of 700 million won, turning a profit even in its early stages. After introducing a reward-based advertising solution to monetize non-paying users, web campaign revenue increased by 134%, and average revenue per daily active user (ARPDAU) rose by 66%.

Competition in the domestic AI character chat market is intensifying. Scatter Lab’s “Zeta” leads with 6 million subscribers and 1.4 million monthly active users (MAU), followed by Ruten Technologies’ “Crack” with 550,000 MAU. Recently, Naver Webtoon entered the market with “Character Chat,” which utilizes its own IP. Internationally, Character.AI leads the market with 45 million active users.

WarpSpace has prioritized the overseas market over competition for the top spot in Korea. Last October, the company was selected for the third cohort of Lotte Ventures’ L-Camp Japan and began preparing to enter the Japanese market. The funds from this investment will be allocated to advancing AI technology, global localization and marketing, user rewards, and the hiring of AI engineers and growth marketers. The company has also identified multimodal expansion—combining images, video, and audio—as its next strategic goal.

Market growth is evident. According to app analytics firm AppFigures, revenue from AI companion apps reached $82 million in the first half of last year, a 64% increase compared to the same period the previous year. However, issues related to inappropriate content and copyright remain common challenges across the industry. A prime example is Zeta, which was sued by six webtoon companies, including Kakao Entertainment, for aiding and abetting copyright infringement. CaveDuck also faces similar risks given the broad scope of permissible content for its adult user base.