Chai Discovery raises $130M to scale AI-driven drug development

Chai Discovery, an AI startup founded in 2024, has secured significant backing to scale its molecular design technology. In December, the company completed its Series B funding round, establishing the following milestones:

• Funding raised: $130 million
• Company valuation: $1.3 billion

Alongside the funding, Chai Discovery announced a partnership last Friday with Eli Lilly. The pharmaceutical giant will use Chai Discovery’s software to help develop new medicines. Specifically, Eli Lilly will utilize Chai-2, an algorithm designed to develop antibodies—the proteins necessary to fight illnesses.

The deal comes amid an industry shift away from traditional drug discovery—the process of identifying new molecules to develop pharmaceuticals. Historically, companies relied on high-throughput screening, a traditional drug discovery technique that offers an expensive and often unsuccessful scattershot approach. Instead, modern biotech firms leverage AI to streamline this process. The distinction between software partnerships and physical infrastructure is highlighted by Eli Lilly’s other recent moves: shortly after the Chai Discovery announcement, Eli Lilly announced a separate collaboration with Nvidia on a $1 billion partnership to create an AI drug discovery lab in San Francisco.

Investors and partners expect these computational models to compress clinical timelines. Elena Viboch, managing director at major backer General Catalyst, believes that biopharma companies partnering with Chai will be the first to get molecules into the clinic. Viboch stated, “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.” She noted this could mean partnering in 2026 to see first-in-class medicines enter clinical trials by the end of 2027. Aliza Apple, head of Lilly’s TuneLab program, added that combining Chai’s generative design models with Lilly’s biologics expertise and proprietary data is intended to help accelerate the development of innovative medicines.

Chai Discovery’s fast growth—raising its funding in a little over 12 months—has roots stretching back around six years ago to conversations with OpenAI CEO Sam Altman regarding a potential proteomics startup, which is the study of proteins. Co-founder Josh Meier, who worked at OpenAI in 2018, later developed a transformer protein-language model at Facebook and spent three years at Absci. In 2024, Meier and co-founder Jack Dent established Chai Discovery, initially working out of OpenAI’s offices in San Francisco. Dent noted that OpenAI provided the startup with office space. The startup has rallied backing from influential Silicon Valley investors by building its models from scratch. Dent emphasized that the team focused on pushing the capabilities of these models using highly custom architectures rather than fine-tuning off-the-shelf open-source models.

Why it matters

The deal with Eli Lilly and the company’s rapid valuation growth highlight the increasing integration of AI and advanced data technologies in the notoriously difficult and time-consuming process of drug discovery.