A new artificial intelligence startup founded by the creators of the world's most widely used computer vision library has emerged from stealth with technology that generates realistic human-centric videos up to five minutes long — a dramatic leap beyond the capabilities of rivals including OpenAI's Sora and Google's Veo.
CraftStory, which launched Tuesday with $2 million in funding, is introducing Model 2.0, a video generation system that addresses one of the most significant limitations plaguing the nascent AI video industry: duration. While OpenAI's Sora 2 tops out at 25 seconds and most competing models generate clips of 10 seconds or less, CraftStory's system can produce continuous, coherent video performances that run as long as a typical YouTube tutorial or product demonstration.
The breakthrough could unlock substantial commercial value for enterprises struggling to scale video production for training, marketing, and customer education — markets where brief AI-generated clips have proven inadequate despite their visual polish.
"If you really try to create a video with one of these video generation systems, you find that a lot of the times you want to implement a certain creative vision, and regardless of how detailed the instructions are, the systems basically ignore a part of your instructions," said Victor Erukhimov, CraftStory's founder and CEO, in an exclusive interview with VentureBeat. "We developed a system that can generate videos basically as long as you need them."
How parallel processing solves the long-form video problem
CraftStory's advance rests on what the company describes as a parallelized diffusion architecture — a fundamentally different approach to how AI models generate video compared to the sequential methods employed by most competitors.
Traditional video generation models work by running diffusion algorithms on increasingly large three-dimensional volumes where time represents the third axis. To generate a longer video, these models require proportionally larger networks, more training data, and significantly more computational resources.
CraftStory instead runs multiple smaller diffusion algorithms simultaneously across the entire duration of the video, with bidirectional constraints connecting them. "The latter part of the video can influence the former part of the video too," Erukhimov explained. "And this is pretty important, because if you do it one by one, then an artifact that appears in the first part propagates to the second one, and then it accumulates."
Rather than generating eight seconds and then stitching on additional segments, CraftStory's system processes all five minutes concurrently through interconnected diffusion processes.
Crucially, CraftStory trained its model on proprietary footage rather than relying solely on internet-scraped videos. The company hired studios to shoot actors using high-frame-rate camera systems that capture crisp detail even in fast-moving elements like fingers — avoiding the motion blur inherent in standard 30-frames-per-second YouTube clips.
"What we showed is that you don't need a lot of data and you don't need a lot of training budget to create high quality videos," Erukhimov said. "You just need high quality data."
Model 2.0 currently operates as a video-to-video system: users upload a still image to animate and a "driving video" containing a person whose movements the AI will replicate. CraftStory provides preset driving videos shot with professional actors, who receive revenue shares when their motion data is used, or users can upload their own footage.
The system generates 30-second clips at low resolution in approximately 15 minutes. An advanced lip-sync system synchronizes mouth movements to scripts or audio tracks, while gesture alignment algorithms ensure body language matches speech rhythm and emotional tone.
Fighting a war chest battle with $2 million against billions
CraftStory's funding comes almost entirely from Andrew Filev, who sold his project management software company Wrike to Citrix for $2.25 billion in 2021 and now runs Zencoder, an AI coding company. The modest raise stands in stark contrast to the billions flowing into competing efforts — OpenAI has raised over $6 billion in its latest funding round alone.
Erukhimov pushed back on the notion that massive capital is prerequisite for success. "I don't necessarily buy the thesis that compute is the path to success," he said. "It definitely helps if you have compute. But if you raise a billion dollars on a PowerPoint, in the end, no one is happy, neither the founders nor the investors."
Filev defended the David-versus-Goliath approach. "When you invest in startups, you're fundamentally betting on people," he said in an interview with VentureBeat. "To paraphrase Margaret Mead: never underestimate what a small group of thoughtful, committed engineers and scientists can build."
He argued that CraftStory benefits from a focused strategy. "The big labs are in an arms race to build general-purpose video foundation models," Filev said. "CraftStory is riding that wave and going very deep into a specific format: long-form, engaging, human-centric video."
Why computer vision expertise matters in generative AI video
Erukhimov's credibility stems from his deep roots in computer vision rather than the transformer architectures that have dominated recent AI advances. He was an early contributor to OpenCV — the Open Source Computer Vision Library that has become the de facto standard for computer vision applications, with over 84,000 stars on GitHub.
When Intel reduced its support for OpenCV in the mid-2000s, Erukhimov co-founded Itseez with the explicit goal of maintaining and advancing the library. The company expanded OpenCV significantly and pivoted toward automotive safety systems before Intel acquired it in 2016.
Filev said this background is precisely what makes Erukhimov well-positioned for video generation. "What people sometimes miss is that generative AI video isn't just about the generative part. It's about understanding motion, facial dynamics, temporal coherence, and how humans actually move," Filev said. "Victor has spent his career mastering exactly those problems."
Enterprise focus targets training videos and product demos
While much of the public excitement around AI video generation has centered on creative tools for consumers, CraftStory is pursuing a decidedly enterprise-focused strategy.
"We are definitely thinking about B2B more than consumer," Erukhimov said. "We're thinking about companies, specifically software companies, being able to make cool training videos and product videos and launch videos."
The logic is straightforward: corporate training, product tutorials, and customer education videos often run several minutes and require consistent quality throughout. A 10-second AI clip cannot effectively demonstrate how to use enterprise software or explain a complex product feature.
"If you need a longer-form video, then you should go with us," Erukhimov said. "We can create up to five minutes, consistent video, high quality."
Filev echoed this assessment. "One huge gap in this market is the lack of models that can generate consistent videos over longer sequences — and that's extremely important for real-world use," he said. "If you're creating a commercial for your company, a 10-second video, no matter how good it looks, just isn't enough. You need 30 seconds, you need two minutes — you need more."
The company anticipates cost savings for customers. Filev suggested that "a small business owner could create content in minutes that previously would have cost $20,000 and taken two months to produce."
CraftStory is also courting creative agencies that produce video content for corporate clients, with the value proposition centered on cost and speed: agencies can record an actor on camera and transform that footage into a finished AI video, rather than managing expensive multi-day shoots.
The next major development on CraftStory's roadmap is a text-to-video model that would allow users to generate long-form content directly from scripts. The team is also developing support for moving-camera scenarios, including the popular "walk-and-talk" format common in high-end advertising.
Where CraftStory fits in a fragmented competitive landscape
CraftStory enters a crowded and rapidly evolving market. OpenAI's Sora 2, while not yet publicly available, has generated significant buzz. Google's Veo models are advancing quickly. Runway, Pika, and Stability AI all offer video generation tools with different capabilities.
Erukhimov acknowledged the competitive pressure but emphasized that CraftStory serves a distinct niche focused on human-centric videos. He positioned rapid innovation and market capture as the company's primary strategy rather than relying on technical moats.
Filev sees the market fragmenting into distinct layers, with large tech companies serving as "API providers of powerful, general-purpose generation models" while specialized players like CraftStory focus on specific use cases. "If the big players are building the engines, CraftStory is building the production studio and assembly line on top," he said.
Model 2.0 is available now at app.craftstory.com/model-2.0, with the company offering early access to users and enterprises interested in testing the technology. Whether a lightly-funded startup can capture meaningful market share against deep-pocketed incumbents remains uncertain, but Erukhimov is characteristically confident about the opportunity ahead.
"AI-generated video will soon become the primary way companies communicate their stories," he said.
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