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.

Back in 2010, a few years after selling his startup to Google, Cuenca cofounded a company called Freepik in Málaga—the sun-drenched birthplace of Pablo Picasso on Spain’s southeastern coast. Freepik carved a profitable niche for itself as one of the most popular online platforms for stock images, and the company helped establish Málaga as an emerging tech hub that has attracted companies like Google, Oracle, and Vodafone. 

When OpenAI’s DALL-E 2 image generator came out in 2022 though, Cuenca realized everything was about to change and he pivoted hard into generative AI. Freepik began offering tools that combined AI image-generating models with editing tools. Last year, he pivoted even further and pushed the company into AI video generation. 

Today, the business is generating $230 million in annual recurring revenue, with video accounting for roughly half of the revenue, Cuenca tells Fortune exclusively. And given that its business has changed so much from its initial days as a stock imaging platform, the company is changing its name from Freepik to Magnific.

“We are creating a new economy,” says Cuenca, who is the CEO. “It’s not that we are getting users from any particular competitor, it’s that people are finding that they can do a new thing that was not possible before.”

Magnific isn’t trying to compete with the big model makers. It lets users pick from various video AI models, including Google’s Veo 3.1 and ByteDance’s Seeddance 2.0, and combines it with its own tools. Magnific’s pre-production tools, for example, let users create assets like images of characters, props, and scenery to create a polished AI video that’s consistent with the storyline. Magnific’s product has been used in ad campaigns for Puma and Carl’s Jr, as well as in the Amazon Prime Video series House of David, and by the BBC, among others.

Making the pivot from an established business to something new like video AI wasn’t easy, Cuenca acknowledges. The company currently has 400 employees, down from roughly 550 when it was focused on stock images. “There’s going to be some pain in any transformation,” Cuenca says, but notes the company is hiring employees with different skills now and that the intention is to ultimately get bigger than Freepik was at its peak. The company opened an office in San Francisco in 2023 that currently has around 20 employees, and also has an office in Colombia. 

Throughout the journey from Freepik to Magnific, Cuenca says the company has been bootstrapped the entire time. He’s never raised money from outside investors, and he says Magnific is profitable. 

Would he consider raising money in the future, especially given the not-so-trivial costs of generating tokens for AI? At some point, perhaps, Cuenca says. But, “if we do it, it’s because we want to grow the DNA of the company.”

See you tomorrow,

Alexei Oreskovic
X: @lexnfx
Email: alexei.oreskovic@fortune.com

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VENTURE CAPITAL

- Coultreon Biopharma (formerly Onco3r Therapeutics), a Leuven, Belgium-based developer of therapies in immunology, raised $125 million in Series A funding. Sofinnova Investments, Forbion, and Novo Holdings led the round and were joined by Galapagos, Regeneron Ventures, and others.

- Liquid Instruments, a San Diego-based developer of test and measurement instruments for the manufacturing, defense, and education industries, raised $50 million in Series C funding. Keysight Technologies and the Australian Government’s National Reconstruction Fund Corporation led the round. 

- SquareMind, a Paris, France-based AI and robotics company focused on dermatology, raised $18 million in funding. Sonder Capital led the round and was joined by Deeptech 2030 Fund, Adamed Technology, Calm/Storm Ventures, Teampact Ventures, and others.

- Patronus, a Berlin, Germany-based developer of a smartwatch and family app designed for the safety of seniors, raised €11 million ($12.9 million) in growth funding. 3TS Capital Partners led the round and was joined by Grazia Equity, Singular, Burda Principal Investments, Adjacent, NAP, and UVC Partners.

- Clarasight, a New York City-based AI operating system for enterprise travel and expenses, raised $11.5 million in Series A funding. AlleyCorp led the round and was joined by Rackhouse Venture Capital, Clocktower Ventures, Pulse Fund, Thayer Ventures, Future Back Ventures, Vestigo Ventures, and XYZ Venture Capital.

- Segura, a São Paulo-based developer of AI infrastructure for insurance distribution, raised $8 million in seed funding. a16z and Kaszek led the round and were joined by Big_Bets.

- AIRA Health, a Boston-based developer of decision infrastructure for modern clinical development, raised $2 million in pre-seed funding from Interactive Venture Partners and Nesprit.

PRIVATE EQUITY

- Astorg agreed to acquire the microbiology business from Thermo Fisher Scientific, a Waltham, Mass.-based manufacturer of medical equipment, for approximately $1.08 billion. Financial terms were not disclosed.

- BSN Sports, a division of Varsity Brands, backed by KKR, acquired Sports Endeavors, a Hillsborough, N.C.-based club soccer uniforms, equipment, and e-commerce platform, and Lax.com, a Norwalk, Conn.-based e-commerce platform focused on lacrosse. Financial terms were not disclosed.

- Protos, a portfolio company of Southfield Capital, acquired AT-RISK International, a Washington, D.C.-based provider of executive and general protective services, intelligence, and risk consulting services. Financial terms were not disclosed.

EXITS

- Bridgepoint Group agreed to acquire a majority stake in iC Consult, a Munich, Germany-based identity security services company, from Carlyle. Financial terms were not disclosed. 

- Stonepeak and Bernhard Capital Partners agreed to acquire Cleco Group, a Pineville, La.-based electric utility company, from Macquarie Asset Management, British Columbia Investment Management Corporation, and Manulife Investment Management. Financial terms were not disclosed.

- Sullivan Street Partners acquired Mi Hub, a Derby, U.K.-based corporate uniform company, from LDC. Financial terms were not disclosed.

- The Sterling Group acquired Scruggs, a Houston-based water and wastewater valve automation company, from Rox Capital Partners. Financial terms were not disclosed.

- VivaGym, a portfolio company of Providence Equity Partners, agreed to acquire Synergym, a Málaga, Spain-based gym chain, from All Seas Capital. Financial terms were not disclosed.

IPOs

- HawkEye 360, a Herndon, Va.-based developer of space-enabled defense technology, plans to raise up to $416 million in an offering of 16 million shares priced between $24 and $26 on the New York Stock Exchange. The company posted $118 million in sales for the year ended Dec. 31. Insight Partners, NightDragon, GIC, and Razor’s Edge Ventures back the company.

- Suja Life, an Oceanside, Calif.-based juice company, plans to raise up to $213.6 million in an offering of 8.9 million shares priced between $21 and $24 on the Nasdaq. The company posted $327 million in sales for the year ended Dec. 31. Paine Schwartz Food Chain Fund, Meaningful Partners, New Vive Partnerships, and Management HoldCO back the company.

- Seaport Therapeutics, a Boston-based developer of therapies for neuropsychiatric disorders, plans to raise $212.4 million in an offering of 11.8 million shares priced between $16 and $18 on the Nasdaq. PureTech Health, ARCH Venture Partners, General Atlantic, Sofinnova Venture Partners, and Third Rock Ventures back the company.

- Hemab Therapeutics, a Cambridge, Mass.-based developer of therapies designed for blood coagulation disorders, plans to raise up to $212.4 million in an offering of 11.8 milion shares priced between $16 and $18 on the Nasdaq. RA Capital Holdings, Novo Holdings, Len Blavatnik, Sofinnova Partners, Deep Track Capital, Smallcap World Fund, HealthCap Investments, and Avoro Ventures back the company.

FUNDS + FUNDS OF FUNDS

- Emerald Lake Capital Management, a Los Angeles-based private equity firm, raised $800 million for a new fund focused on North American industrial and services companies.

PEOPLE

- Maple Park Capital, a Dallas- and New York City-based investment firm, hired Robert Zell as CFO. Previously, he was COO and CCO at Alta Fox Capital Management.