ETtech Exclusive | Adobe acquires Lightspeed-backed Indian generative AI startup

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Adobe has acquired Bengaluru-based, which runs an artificial intelligence(AI)-powered video creation platform, per an internal memo circulated by the US software major.

With the acquisition, Adobe will look to integrate Rephrase’s tech stack and generative AI video capabilities with its in-house video-editing platform, Creative Cloud, and bolster its offerings. The Bengaluru-based startup provides a text-to-video generation platform that removes complexities and helps users create professional looking videos.

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The transaction is expected to help Adobe accelerate its ability to provide AI-powered video content tools to its customers.

As part of the deal, a majority of Rephrase’s team members will join Adobe, sources aware of the talks told ETtech, requesting anonymity.

We could not ascertain the final deal size.

This also marks the first-ever deal for Adobe in the generative AI and video-tooling space. It also makes Rephrase the first Indian startup to be acquired by Adobe, which has largely struck such deals in its home market, the US, and in Europe.

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Adobe’s Gen AI push

“The team’s expertise in generative AI video and audio technology and experience-building text-to-video generator tools will extend our generative video capabilities — and enable us to deliver more value to our customers faster — all within our industry-leading creative applications,” Ashley Still, senior vice president and general manager, Creative Cloud, wrote in an internal memo to employees on Tuesday. ETtech has seen the copy of the memo sent to its India staff.

With the acquisition, Rephrase’s investors will likely be given a complete cash exit, with the founders being paid in cash and Adobe stock, a source cited above added.

“With competition ramping up on the Big Tech side with Generative AI, the success of tools built (with it) finally, will depend on a distribution play and how many organisations are implementing your tool. In that regard, bigger organisations like Adobe will always have an advantage over smaller competition,” said one of the sources cited earlier, who was aware of the deal talks.

Last week, Microsoft Azure introduced text-to-speech capabilities for digital avatars, through its Azure AI Speech offering, amping up competition against domestic players such as Rephrase.

Queries sent to Rephrase founder Ashray Malhotra and company investor Lightspeed India have not elicited a response so far.

“Adobe has a strong track record of accelerating growth through both organic and inorganic innovation. We are always on the lookout for new talent and technology that supports our strategy and creates more value for our stakeholders,” said an Adobe spokesperson, in response to ET’s queries. also helps influencers and video creators build digital avatars and enables marketing teams.

The firm, founded by IIT Bombay graduates, Malhotra, Nisheeth Lahoti and IIT Roorkee alumni Shivam Mangla, has raised $13.9 million till date. In September, last year, the company raised $10.6 million in a round led by US media company Red Ventures. Other backers of the startup include Lightspeed India, Silver Lake, 8VC, Techstars.

Currently, Adobe’s Creative Cloud suite includes professional editing and workflow management tools, including Premier Pro, After Effects, Audition, Character Animator and

In March, it announced its entry into the generative artificial intelligence (AGI) space with a new model, Firefly, in beta launch mode. The move was focused on bringing generative AI tools to its suite of apps and services. Last month, at Adobe Max, its annual creativity conference, the company previewed its generative AI-to-video capabilities.

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