The Scoop
Investors are pouring cash into a hot new sector of the AI economy: model routing — a practice allowing developers and companies to easily switch between different AI models.
Startup TrustedRouter, which launched publicly six weeks ago, is among a growing crop of model-routing firms looking to cut AI costs and reduce businesses’ dependence on any single model maker. The company this week closed a $6 million seed round, led by Sierra Ventures, it told Semafor.
The biggest player in the routing space is OpenRouter, which started with a $12.5 million seed round in February 2025 and has since agreed to sell to payments provider Stripe in a $7.5 billion deal.
TrustedRouter, CEO Joseph Perla said, aims to differentiate itself by offering end-to-end encryption and verifiable confidential computing for some open-weight models, meaning neither TrustedRouter nor the data center running the model can read a customer’s prompts or outputs, unlike with closed models from OpenAI and Anthropic, which don’t currently offer the same guarantees.
OpenRouter also doesn’t offer those protections, according to Perla: “Security is just a pure baseline. It just has to be secure.”
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Perla, a former Facebook engineer and early Lyft hire who has founded and sold several startups, hopes to win over businesses that are seeing their AI spending balloon, but also putting a premium on keeping their data private.
“If we all encrypt our AI chats,” Perla said, “we can slow down” the cycle in which frontier labs absorb user data to train future models.
He said Chinese AI models, including those from DeepSeek, Zhipu, and Moonshot, are among the most popular on his platform, but he wants to also see a more vibrant American open-source ecosystem. There’s been a flurry of Western open-weight releases in recent weeks, including from Reflection AI and Mistral; on Thursday, Meta released what it called “the most capable US open-weight model to date.”
Eventually, Perla said he wants to launch the “New York Token Exchange,” a marketplace for AI models in which thousands of models from thousands of hosting providers — any data center willing to run an open model — would compete to serve each request, turning AI tokens into a commodity that could be traded with futures, hedges, and price indices, like oil or electricity. He hopes to stage “model IPOs” for new open-weight releases.
J.D.’s view
There’s clear demand from developers for routing services, and TrustedRouter could fill a void for the most privacy-obsessed among them. Whether it goes from niche to mass market could depend on how competitive open-weight models get. If they keep lagging behind their closed competitors at OpenAI and Anthropic, some enterprises and developers will put up with the higher cost and lack of encryption to get a better output for their most advanced tasks.
A project I oversaw last week, in which we analyzed thousands of cable news segments about data centers using AI, cost about $140, because we used advanced closed models. Running that through TrustedRouter on encrypted, confidential infrastructure with less advanced Chinese models would have cost under $20, though the output likely wouldn’t have been as good. These kinds of tradeoffs will keep confronting tech leaders as long as that disparity persists.