Melius Raises $20M Series A After Scrapping Its First Product to Build AI Creative Tools

New York-based AI startup Melius has raised $25 million in total funding after making a major change to its original product strategy.

The company announced a $20 million Series A led by CRV alongside a $5 million seed round led by General Catalyst. Melius is building an AI platform that allows marketers and creative teams to generate advertising campaigns, images, and videos.

The company says it surpassed $1 million in annualised revenue within two months of coming out of stealth in July.

But the more interesting part of the story happened before that growth.

Melius spent more than six months building its first product, only for the founders to decide that the idea did not have enough potential. Rather than continue improving a product they no longer believed in, they scrapped the entire codebase and started again.

The result is a much different company focused on AI-powered creative production.

The first product didn't work

Melius was founded by Joowon Kim, Young Kim, and Arnav Ramu, who previously worked together as engineers at Ramp, the corporate spending and financial software company.

When they started the company more than a year ago, their initial idea was to build an AI-powered performance marketing tool.

The goal was to help marketers manage and optimise advertising spending.

The founders spent more than six months building the product.

Then they changed their minds.

Joowon Kim said the original idea did not have "legs." Instead of continuing to invest time and money into a product they did not believe had enough potential, the team decided to completely abandon it.

They did not simply add a new feature or reposition the product.

They deleted the codebase.

According to Kim, the founders "scrapped the entire codebase" and rebuilt the company around a different opportunity.

That decision led to Melius' current product.

From managing ad spend to creating the ads

The new Melius platform focuses on the creative side of advertising.

Rather than helping marketers decide how to allocate an advertising budget, the company wants to help them actually create the assets and campaigns that go into those campaigns.

Melius describes the platform as an "agents lab for creative work."

Users can use natural language to describe what they want to create, with the platform generating creative assets such as images and videos and helping turn ideas into campaigns.

The idea is to make creative production accessible to a much wider range of users.

That includes experienced creative directors who understand advertising deeply as well as people without professional design or production backgrounds.

For Kim, the product also connects directly with a long-standing personal interest.

He describes himself as a social media influencer and says he has been interested in making short videos since elementary school.

He once wanted to become a YouTuber and experimented with making vlogs.

The projects never became successful, but the interest in digital media stayed with him.

Melius is now effectively building the creative tool he wished he had when he was starting out.

AI turns an idea into a campaign

Melius' broader thesis is that AI can change how creative work gets produced.

Traditional advertising production can involve multiple specialised roles, including copywriters, designers, video editors, creative directors, and production teams.

That process can be expensive and slow, particularly when teams need to create many variations of an advertisement for different audiences, products, platforms, or campaigns.

Generative AI has already started changing individual parts of that workflow.

Image-generation models can produce visual concepts. Video models can generate clips. Language models can produce copy.

Melius is trying to bring those capabilities together into a broader workflow.

The company's platform is designed around agents that can work on creative tasks rather than simply providing a collection of individual AI tools.

That distinction could become increasingly important as businesses move from experimenting with generative AI to using it for production work.

Early revenue after coming out of stealth

Melius emerged from stealth in July.

The company says it reached more than $1 million in annualised revenue within two months.

That is a rapid early commercial trajectory, although the figure is company-reported and represents annualised revenue rather than revenue already collected over a full year.

The speed of that growth is part of what attracted investors.

Melius has now raised $25 million across its seed and Series A rounds.

General Catalyst led the $5 million seed round, while CRV led the $20 million Series A.

The funding gives the company more resources to develop its platform and compete in an increasingly crowded AI creative market.

The competition is already intense

Melius is far from alone in building AI tools for marketers, brands, and creative agencies.

Higgsfield is one of the most visible competitors. The company was valued at $5.4 billion in August after raising a $400 million Series B.

According to the source, Higgsfield has reached more than $700 million in annualised revenue.

Other companies such as Krea and Flora AI are also building products around AI-generated creative content.

That makes Melius' decision to enter the category a significant bet.

But Joowon Kim is not overly concerned about the number of competitors.

He acknowledges that Higgsfield is growing extremely quickly, but believes the market is large enough to support multiple companies.

For Melius, the presence of competitors can also be interpreted as evidence that customers are already spending money on AI-powered creative production.

The company's challenge will be establishing a clear reason for creative teams and marketers to choose its platform over the growing number of alternatives.

Why the founders' Ramp background matters

The Melius founders' previous experience at Ramp gives the company a somewhat unusual starting point.

All three founders worked as engineers at the financial technology company before starting Melius.

Their backgrounds are therefore heavily technical, while the problem they are now tackling is creative.

That combination could shape the product differently from traditional creative software companies.

Instead of starting with existing design workflows and adding AI features, Melius is building around AI agents from the beginning.

The company's ambition is to let users describe an idea in plain language and turn that idea into a finished creative output.

That could reduce some of the technical barriers traditionally associated with producing advertising content.

A startup willing to start over

The most notable part of Melius' story may ultimately be its decision to abandon its first product.

Startups often spend months or years building around an initial thesis, and changing direction can mean admitting that significant work did not lead where the founders expected.

Melius chose a more drastic approach.

The founders spent more than six months building a performance marketing product, concluded that it did not have enough potential, and deleted the codebase.

The new company was then built around a different question: what if AI could help anyone turn a creative idea into advertising content?

So far, the new direction appears to have found early demand.

Melius says it reached more than $1 million in annualised revenue shortly after launching publicly and has now raised $25 million.

The next challenge is much larger.

Melius will have to compete with heavily funded AI creative companies while proving that its agent-based approach can become an indispensable part of the advertising workflow.

For a team that has already shown it is willing to throw away six months of work when the product is wrong, the bigger question may be whether it can keep making the right decisions as the market moves even faster.