AI bot startup Circle Labs raises $4.2M in Lightspeed-led round

Circle Labs, a San Francisco-based startup building AI-powered virtual characters, has raised $4.2 million in a seed round led by Lightspeed.

Why it matters: Metaverse investments continue to grow — not just at big tech companies but also with small startups powering the ecosystem.

Details: Haystack, Adobe's chief product officer Scott Belsky and AI Grant Fund also participated.

• Circle Labs wants to make bots — also known as non-playable characters (NPCs) — smarter. It also is aiming to make them easy for anyone to build and deploy across social platforms.
• The startup refers to its version of NPCs as Shapes. In a blog post released Monday, Lightspeed's Michael Mignano and Faraz Fatemi wrote that Shapes could be a rendition of a video game character, a YouTuber, a brand mascot or "even be an AI version of you."
• "Given the speed at which AI is improving and the volume of collective communication which is now taking place online, it seems inevitable that AI-powered NPCs will be persistent across all of our communication channels in only a few years' time," they wrote.

What's next: The startup, led by founders Anushk Mittal and Noorie Dhingra, is hiring engineers. It currently has a product in closed beta.