To understand the extent of concern among venture capitalists—and the broader Silicon Valley community—regarding legal risks tied to AI training on copyrighted works, you only need to consider the case of AI music platform Suno.
Suno, a service that lets users generate songs with AI using text prompts, revealed on Wednesday that it secured $250 million in Series C funding, bringing its valuation to $2.45 billion after the round. Menlo Ventures led the investment, with additional backing from Nvidia’s NVentures, Hallwood Media, Lightspeed, and Matrix.
The platform provides monthly subscription options for consumers (including a free plan, as well as $8 and $24 per month tiers) and introduced a commercial version for creators last September. According to Suno, it has now reached $200 million in yearly revenue, as reported to The Wall Street Journal.
Back in May 2024, Suno completed a $125 million Series B round led by Lightspeed Venture Partners, Nat Friedman, Daniel Gross, Matrix, and Founder Collective, which valued the company at roughly $500 million.
However, Suno has also become a prominent example in lawsuits brought by artists over AI training. The company is currently defending itself against a lawsuit from three major record labels—Sony Music Entertainment, Universal Music Group, and Warner Music Group—who claim Suno used copyrighted content scraped from the web without authorization.
Such lawsuits remain in a legal gray area in the United States, and most are resolved through licensing deals for training data. (For example, Universal and Udio reached a settlement last month.) Suno has also encountered similar legal actions from Denmark’s Koda and Germany’s GEMA. Notably, GEMA recently won a lawsuit in Germany against OpenAI over the legality of training on scraped copyrighted works.
Despite these legal hurdles, Suno’s rapid growth and the clear demand for AI-created music mean that investors remain largely unfazed.
“Type in your idea, hit Create, and instantly, you’re not just thinking about music—you’re producing it. That transformation from listener to creator? That’s the opportunity Suno delivers,” wrote the Menlo Ventures team in their blog post about the investment.
According to Menlo, what stood out wasn’t just Suno’s technology, but also its organic growth—driven by users sharing their creations with friends and groups.
There’s little doubt that the AI sector will, over time, resolve the legal questions around using data first and seeking approval later. But even before those issues are fully addressed, it’s clear that AI-generated music is already here.
