How a Spanish startup pivoted to video AI and built a $230 million ARR business with no VC funding
Joaquín Cuenca Abela, a Spanish entrepreneur, pivoted his company Freepik from a stock image platform to an AI video generation business now rebranded as Magnific, achieving $230 million in annual recurring revenue without venture capital funding. The company leverages existing AI models like Google’s Veo and ByteDance’s Seeddance while adding proprietary pre-production tools to create consistent, high-quality AI-generated videos. Magnific is used by major brands and media companies, remains profitable, and plans to expand despite workforce reductions during its transition.
- ▪Freepik, founded in 2010 in Málaga, Spain, pivoted to generative AI after the release of DALL-E 2 in 2022 and has now rebranded as Magnific.
- ▪Magnific generates $230 million in annual recurring revenue, with video AI accounting for about half of that income.
- ▪The company is fully bootstrapped, profitable, and has not raised external funding despite the high costs associated with AI token generation.
- ▪Magnific’s tools have been used in campaigns for Puma, Carl’s Jr, the BBC, and the Amazon Prime Video series House of David.
- ▪The company employs 400 people, down from 550, and has offices in Málaga, San Francisco, and Colombia.
- ▪Magnific allows users to choose from multiple AI video models and enhances them with its own pre-production asset creation tools.
Opening excerpt (first ~120 words) tap to expand
Greetings, Tech Editor Alexei Oreskovic guest-writing your Term Sheet today. Silicon Valley likes to think of itself as the center of the tech universe, and San Francisco’s heavy concentration of AI companies is only reinforcing that habit.Recommended Video But innovation, creativity, and entrepreneurial acumen aren’t restricted by borders, as I was reminded when talking to Joaquín Cuenca Abela recently. The 49-year-old Spanish founder is showing how it’s possible to thrive in the AI market even if your company isn’t building a frontier model, even if it’s not backed by VC money—and even if it isn’t based in Silicon Valley.
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