Smartcat’s AI Translation Revolution: Transforming the Language Service Industry

AI might never fully replace human translators. While AI can handle translations, it often lacks the depth and nuance that comes from human experience. AI models choose words based on probabilities rather than understanding the cultural context or emotions behind them. As a result, AI translations can feel flat, like reading a textbook instead of experiencing the true flavor of the original text.

However, for many companies, the need for precise and quick translations outweighs the desire for richness, making the AI translation market a thriving sector. One notable player is Smartcat, a company founded in 2016 that offers automated translation tools tailored for enterprise clients. Ivan Smolnikov, Smartcat’s co-founder and CEO, is confident in the company's growth.

"We currently serve over 1,000 corporate clients, including about 20% of the Fortune 500," he shared. “Most of our customers are large global companies, but we also work with many local and international government organizations."

Before launching Smartcat, Smolnikov had a background in science as a physicist at the Russian Academy of Sciences, focusing on fiber optics materials. After two years, he transitioned to entrepreneurship by founding ABBYY LS, a language services company. Smartcat started as an internal project at ABBYY before becoming an independent entity in 2016. Smolnikov left ABBYY the same year to focus solely on Smartcat.

"I created Smartcat to transform the traditional translation agency model, which relies on a lengthy, manual supply chain heavily dependent on human input," Smolnikov said. "Our AI platform offers diverse use cases for enterprises handling multilingual content."

Smartcat, based in Boston, provides a range of tools, apps, and services to help companies translate written and spoken content — such as e-learning courses, websites, documents, and software — into approximately 280 languages. Instead of developing its own AI translation models, Smartcat uses a “matching engine” that selects the most suitable third-party model for a given piece of content and the desired output language.

While Smartcat fine-tunes certain translation models, especially when a company has a large database of specific phrases to incorporate, the platform acknowledges that AI isn't perfect. To address this, Smartcat offers access to a network of translators and copy editors who can review and refine translations for an additional fee. Customers have flexible options, ranging from AI-only translations to a combination of AI translation with human editing.

There have been some issues in the past, with translators on platforms like Reddit claiming problems with dishonest clients and delayed payments. However, Smolnikov assures that these problems have been resolved, and translators are free to set their rates, minus a 2% to 8% fee charged by Smartcat depending on the volume of jobs and the countries involved.

The landscape of AI translation services is crowded, with numerous competitors such as EasyTranslate, D-ID, DeepL, Lilt, and Lengoo. However, Smolnikov believes Smartcat mainly competes with traditional translation agencies and in-house teams.

“Enterprises have typically outsourced to agencies or tried insourcing, but manual methods often lacked scalability,” he said. “Smartcat’s emphasis on language AI quality provides a viable alternative."

Investors appear to agree with this vision. Smartcat recently secured $43 million in a Series C funding round led by Left Lane Capital, bringing its total funding to $70 million. This fresh investment will go towards expanding Smartcat’s 200-person team, enhancing product development, and boosting marketing and sales efforts.

Vinny Pujji, managing partner at Left Lane Capital, noted, "As an early market mover, Smartcat has developed a broad customer base and is in a strong position to continuously enhance its product offerings, building a significant competitive advantage over time."

With the AI translation sector predicted to grow rapidly, Smartcat's strategic positioning could yield substantial rewards. According to recent market analysis, the global market for machine translation solutions, valued at $978.2 million in 2022, is expected to grow at a compound annual growth rate of 13.5% from 2023 to 2030.