Campfire raises $3.95M for generative AI game tool Sprites

Campfire has raised $3.95 million in a seed funding round for its generative AI game engine dubbed Sprites.

Sprites lets developers build AI agents with memory and emotions who can hold conversations with users and accompany them on online adventures, making games, interactive media and consumer apps personalized and more engaging.

The San Francisco company has built the tech into its own game, Cozy Friends, which is debuting today as a showcase for AI-native gaming. Like many other generative AI game startups, Campfire considers the AI tech to be the biggest advance in gaming since the introduction of 3D graphics.

Siamak Freydoonnejad, cofounder of Campfire, said the company provides an all-in-one GenAI platform that enables the creation of the world’s first AI-native life simulation games. Cozy Friends will be on both Steam on the PC and iOS on mobile.

The seed round came from Y Combinator, FundersClub, Mercury founder Immad Akhund, gaming entrepreneur and investor Juha Paananen, Uken Games founder Chris Ye and others.

Available for pre-purchase as of today, Cozy Friends has a 20,000-plus person waitlist.

Freydoonnejad described Cozy Friends as the world’s first AI-native life simulation game, in the vein of Animal Crossing and The Sims, which both became multi-billion-dollar franchises. Cozy Friends allows users to interact with and befriend AI agents with unique personalities, memories and emotions in a highly personalized and immersive gaming world, he said.

“The shift to AI-native games represents the biggest advancement in gaming since the move to 3D,” said Juha Paananen, an investor in Campfire, in a statement. “When I first saw the demo, I was pretty stunned. We think this technology will transform gaming and entertainment, and Campfire is showing a blueprint for AI-native games with Cozy Friends, and the toolset for any developer to do the same with Sprites.”

Campfire’s Sprites lets developers build AI characters who can hold conversations with users and accompany them on online adventures, making games, interactive media and consumer apps more engaging.

The company was founded in 2021 by Freydoonnejad and Sina Zargaran, longtime friends who met in college. They started out making a multiplayer gaming platform for remote teams. But after creating an AI companion agent during an internal hackathon in August 2023 and seeing a five-fold increase in user engagement in their own games, they pivoted the company to solely focus on delivering this transformative AI capability to gaming and the larger entertainment industry.

“GenAI is sparking a paradigm shift in how people engage with content in video games and entertainment apps,” said Freydoonnejad. “Users can interact with agentic AI companions capable of speaking and taking action, embarking on emergent adventures across different games and apps while maintaining the context of your relationship. This makes the experience more social, more human-like, and much more fulfilling. People can go from playing their favorite game or scrolling their favorite app with these companions, to even confiding about their daily experiences. It’s really important to make emotionally intelligent and ethical companions and that’s our mission at Campfire.”

Remio VR is one of the first developers to deploy Campfire’s Sprites platform.

“We knew we wanted to enable our users to create their own AI characters, but it wasn’t easy,” said Jos van der Westhuizen, CEO at the Khosla Ventures-backed social VR company, in a statement. “LLMs alone don’t get you there – it requires a lot of custom work. With Campfire’s Sprites, we managed to ship our virtual pet companions in a matter of days to our user’s delight. This new capability will give our game a huge competitive edge.”

Next generation

“We build tools for developers who are going to power the next generation of interactive media, entertainment and consumer apps, and use cutting-edge AI to achieve this,” Freydoonnejad said. “Our tool set is called Sprites. It lets developers create human like conversational agents with emotions, memories and personalization.”

He said developers who use sprites can create entirely new AI, native content categories.

“One of the content types our tools it enables are basically AI native life simulation games. So think of Animal Crossing or the Sims, but with AI agents that have basically unique personalities.”

These characters have dynamic and personalized experiences, unique speaking styles, memories, and emotions.

“Most importantly, it really unlocks the layer of immersion for players to develop meaningful, open ended social relationships with these agents,” he said. “And these agents can reciprocate that with other agents or other players in these simulated worlds to showcase what’s possible in interactive media with our tools.”

The company pivoted into generative AI about a year ago. Freydoonnejad said the company has been inspired by other companies like Pixar in films and Epic Games in gaming.

“These are generational creative technology companies that solve every single problem it takes to launch a paradigm-shifting tech breakthrough and enable entirely new content categories,” Freydoonnejad said.

Freydoonnejad and Zargaran are on their second startup. They started out this time making a multiplayer gaming platform. Then, at an internal hackathon, they adapted to the generative AI gaming platform.

“We saw this huge change in user behavior,” Freydoonnejad said. “Our initial intended use case was to fill the lobbies with fake players. But people realized these players are AI agents, and yet spent five times the time just talking to these agents.”

That helped redefine the mission of the company. The team launched a video of a prototype on YouTube back in November, and it got a lot of early traction among fans.

I noted there was a ton of competition, including well-funded AI non-player character (NPC) startups like Inworld AI. with perhaps a new competitor entering the market every week.

“We evaluated every tool that was out there, from Inworld to Convai and others,” Freydoonnejad said. “And we really think that there wasn’t something that was practical for building meaningfully different content on top of every other developer we talked to.”

He noted other companies are building layers of abstractions or foundational models without actually having meaningful content. That’s like building for a non existent market, he said. Freydoonnejad said he sees Sprites becoming an all-in-one platform for generative AI for interactive media, entertainment and consumer apps.

“Applying LLMs to conversational agents is our starting point. We have a lot of other tech that empowers Cozy Friends that we haven’t commercialized yet as part of Sprites goes into agential behavior and on the generative media and diffusion models. So we have a lot of workflows around image and video models internally, both from content production to marketing. So we will be commercializing those workflows and solution solutions, one by on.”

The inspiration came from a “cold start” problem they had with the multiplayer game. They wanted players to bond in social chat for the game, so they began created AI characters with personalities. Players would hang out and talk to the players longer than they would play the games, even though they knew they were talking to AI agents.

“It’s been a pretty humbling experience to make something commercially viable that meets the players expectations,” Freydoonnejad said. “Based on all the feedback from our early adopters and Discord community, this was our journey into game.”

The company is hiring senior engineers and a technical game designer to expand its team of five people. Freydoonnejad said the company plans to monetize Cozy Friends as best it can as it provides the blueprint for AI native games and the business model to go with it.

“We want to show how the pricing of having user-facing AI and LLMs running inference in the background is going to work for games, Freydoonnejad said. The title will likely start as a free-to-play game with some usage limitations around the AI. There will likely be a content season pass with an unlimited, advanced AI subscription.