AI video startup Runway’s new fundraising round signals its shift in orientation to a type of foundation model that has been growing in popularity in the physical AI market for its realism and accuracy.
The new funding bolstered the AI startup’s valuation to $5.3 billion, $2B more than it was less than a year ago.
The funding will help the 2018 startup focus on world models, a type of foundation model that is proving popular with enterprises for the predictability it provides across different settings. World models are trained to learn how the physical world works and to predict physics, cause-and-effect, and spatial dynamics.
The New York-based vendor plans to use the capital to pretrain the next generation of world models, a shift from its focus on video models since it released the Gen-1 video-to-video model in 2023.
Runway’s redirection highlights the growing significance of world models in the enterprise AI market. Because world models enable the simulation of the physical world in a virtual environment, they are used across industries such as healthcare, autonomous vehicles and robotics.
The area has seen significant growth, and Runway competes with Google and Nvidia, which also have world models. In January 2025, Nvidia introduced Cosmos World Foundation models and launched the Cosmos WFM platform to generate “physics-aware” videos for training physical AI and robots. Google DeepMind released its general-purpose world model, Genie 3, last summer. Runway introduced GWM-1, a general-world model for interactive environments, robotics, and digital avatars, in December.
An Expected Physical World
The growth in the use of world models stems from their ability to provide greater predictability about what will happen in the physical world.
“As the level of accuracy increases with the world model, you can almost be sure that whatever has been trained with that model can work in a safe manner in the real world,” said Lian Jye Su, an analyst at Omdia, a division of Informa TechTarget. “That has a lot of implications from a functional, safety and compliance standpoint.”
“Being able to offer that level of accurate representation of the physical world is quite significant to enterprises,” Su continued.
He added that although Runway has been up to now a video generation vendor focused on enterprises, the fact that it sees an opportunity in world models means that its clients demand it.
“As we move forward, we’re probably going to see a lot more cross-pollination between the physical and virtual world,” Su said. For example, there might be opportunities to embed spatial computing into other types of technology, he said.
“Because of the advancement in AI, because of the low barrier to entry for enterprise, we’re going to see a lot more enterprises trying this technology,” Su added. “That opens up new possibilities in the enterprise sector.”
General Atlantic led the funding round. Nvidia, Adobe Ventures, AllianceBernstein, AMD Ventures and Fidelity Management and Research Company participated.
