At a Glance
- Chai Discovery raised $130 million in Series B funding, reaching a $1.3 billion valuation
- The AI startup announced a partnership with pharmaceutical giant Eli Lilly to develop new medicines
- Founded in 2024, Chai has backing from OpenAI CEO Sam Altman and General Catalyst
- Why it matters: The deal signals growing pharma industry confidence in AI-driven drug discovery
AI drug discovery startup Chai Discovery has secured $130 million in Series B funding and announced a major partnership with Eli Lilly, marking a significant milestone for artificial intelligence in pharmaceutical development.
The $1.3 billion-valued company, founded just over a year ago, will provide Eli Lilly access to its Chai-2 algorithm designed to develop antibodies – the proteins necessary to fight illnesses. The startup aims to serve as a “computer-aided design suite” for molecules.
Rapid Rise in AI Drug Discovery
Chai’s funding success and pharmaceutical partnership represent a breakthrough moment for AI-driven drug development. Traditional drug discovery methods, like high-throughput screening, have proven expensive and often unsuccessful, creating an opening for AI-powered alternatives.
The startup’s trajectory accelerated quickly. Founded in 2024 by young co-founders, Chai has already attracted hundreds of millions in investment from Silicon Valley’s most influential investors. The recent Series B round pushed the company’s valuation to $1.3 billion.
The Eli Lilly partnership announcement came shortly before the pharmaceutical company revealed a separate $1 billion collaboration with Nvidia to create an AI drug discovery lab in San Francisco. This “co-innovation lab” will combine big data, compute resources, and scientific expertise to accelerate medicine development.
From OpenAI to Drug Discovery
Chai’s origins trace back approximately six years to conversations between co-founders and OpenAI CEO Sam Altman. Co-founder Josh Meier previously worked at OpenAI in 2018 on research and engineering teams.
After leaving OpenAI, Altman contacted Meier’s college friend Jack Dent about a potential proteomics startup opportunity. Meier and Dent had met in computer science classes at Harvard, though Dent was then working as a Stripe engineer.
“Altman messaged me to say that everyone at OpenAI thought highly of him and asked if I thought he’d be open to working with them on a proteomics spinout,” Dent recalled. However, Meier felt the AI technology wasn’t advanced enough at that time.
Instead, Meier joined Facebook’s research team, where he helped develop ESM1, the first transformer protein-language model – an important precursor to Chai’s current work. He later spent three years at Absci, another AI biotech firm focused on drug creation.
By 2024, Meier and Dent felt ready to pursue the proteomics company they’d discussed with Altman. “Josh and I reached back out to Sam and told him we should pick up that conversation where we left off – and that we were starting Chai together,” Dent said.
OpenAI became one of Chai’s first seed investors. The founders established Chai while working from OpenAI’s offices in San Francisco’s Mission neighborhood. “They were kind enough to give us some office space,” Dent noted.
Custom AI Architecture
Chai’s rapid growth stems from assembling a talented team and developing proprietary technology. “We really just put our heads down and pushed the frontier of what these models are capable of,” Dent explained.
The company built highly custom architectures rather than using existing large language models. “Every line of code in our codebase is homegrown. We’re not taking LLMs off the shelf that are in the open source [ecosystem] and fine-tuning them,” Dent emphasized.
This approach differentiates Chai from competitors who modify existing AI models. The startup’s custom-built algorithms specifically target molecular design and antibody development.
Industry Confidence and Skepticism
The biotech industry shows mixed reactions to AI-driven drug discovery. While some industry veterans remain skeptical about AI’s impact on traditional drug development challenges, investors and pharmaceutical companies increasingly embrace the technology.
Elena Viboch, managing director at General Catalyst and major Chai backer, expressed confidence in the startup’s approach. “We believe the biopharma companies that move the most quickly to partner with companies like Chai will be the first to get molecules into the clinic, and will make medicines that matter,” Viboch stated.
She predicted companies partnering with Chai in 2026 could see “first-in-class medicines enter into clinical trials by the end of 2027.
Aliza Apple, head of Lilly’s TuneLab program using AI and machine learning for drug discovery, also endorsed Chai’s technology. “By combining Chai’s generative design models with Lilly’s deep biologics expertise and proprietary data, we intend to push the frontier of how AI can design better molecules from the outset,” Apple said.
The ultimate goal remains accelerating innovative medicine development for patients, combining AI capabilities with pharmaceutical expertise.
Market Validation
Chai’s success reflects broader industry trends. Pharmaceutical companies increasingly partner with AI startups to improve drug discovery efficiency and reduce development timelines.
Viboch noted no fundamental barriers exist for deploying these models in drug discovery. While companies must still conduct testing and clinical trials, early AI adopters could gain significant advantages in both compressing discovery timelines and developing previously challenging medicine classes.
The startup’s partnership with Eli Lilly, combined with its rapid valuation growth, demonstrates growing pharmaceutical industry confidence in AI-powered drug development approaches.
Key Takeaways
Chai Discovery’s $130 million Series B raise and Eli Lilly partnership validate AI’s growing role in pharmaceutical development. Founded by former OpenAI and Facebook researchers, the startup has built custom AI architectures for molecular design. With backing from major Silicon Valley investors and pharmaceutical partnerships, Chai represents the new wave of AI-driven biotech companies aiming to transform drug discovery.
