AI movies designed for your phone are getting the Silicon Valley and Hollywood treatment.
TrueShort, which makes AI “verticals” — movies chopped up into one- to three-minute episodes — has gathered a who’s who of backers.
The startup has raised $12 million in seed funding led by Keith Rabois at Khosla Ventures, Business Insider exclusively learned. Also participating in the round were Jeffrey Katzenberg’s WndrCo, A24’s Ravi Nandan, Behance founder Scott Belsky, and General Catalyst. The company’s founding creative partner is W. Hayden Schwartz, formerly of Legendary Entertainment.
TrueShort was started last year by Nate Tepper, a serial entrepreneur who founded Humans Anonymous, a mental health app; Set The Set, a song request app; and UNight, a meet-up app.
Tepper said he had long wanted to make a Hollywood film but knew finances would be a limiting factor. Then he saw the explosion of low-budget “micro dramas” — another name for verticals — from mobile apps like ReelShort and DramaBox and recognized the opportunity to scale the model fast with AI.
“What we’re doing is somewhere between Netflix and TikTok,” Tepper said. “We think there’s some space in there for premium entertainment, but consumed in a different way: mobile, short form.”
Other Hollywood notables have been getting into verticals as traditional film and TV production has slowed. Film producer Tommy Harper just launched a verticals app called VeYou, following similar moves by ex-Miramax CEO Bill Block and Lloyd Braun.
Streaming consulting firm Owl & Co. estimated vertical film apps generated $1.4 billion in the US in 2025.
Other micro-drama apps have also begun making films featuring AI characters, to mixed reviews from viewers.
Tepper started TrueShort with documentary-style true crime series. He said he thought these types of movies — with their mix of real archival footage and AI characters — would be more palatable for viewers. He added that he wants to branch out quickly to other genres as the quality improves.
He said he plans to add 60 filmmakers and editors this year, on top of the 20 the company has now. High-quality animation can be made with AI, and live-action is getting there, he said.
Reducing cost-intensive film production is one of AI’s big promises. TrueShort makes one 20- to 30-minute movie a week, using AI tools from companies like Eleven Labs and Midjourney. In this way, teams can produce a movie for $1,000 to $3,000 each, a fraction of the typical $100,000 to $300,000 cost of a micro drama using human actors.
Most of the micro drama apps today are subscription-driven and rely heavily on paid marketing to get people to download their apps. Some industry insiders predict the model will shift toward ads as people get subscription fatigue, and that viewing will shift to apps like TikTok that already have large user bases. TikTok is casting actors to make its own micro dramas after launching a micro drama feed in its app as well as a freestanding app, Pine Drama.
TrueShort makes money through subscriptions: $39.99 a year, $14.99 a month, or $6.99 a week. Tepper said he has no plans to sell ads and that the subscription model is working well, with the company on track to make money at a rate of $10 million a year by the end of 2026. The app relies on paid marketing, but Tepper said he’s optimistic that as its quality improves, word of mouth will replace that need.
“We don’t want to rely on paid ads forever,” he said.
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