Fal, a San Francisco-based company that hosts and runs AI models for video, images and audio, has closed a $1.3 billion funding round, TechCrunch reports. Bessemer Venture Partners led it, with Nvidia, Sound Ventures and T. Rowe Price also taking part.
The numbers
- The round values Fal at $16 billion, double the $8 billion valuation it had in April, according to Bloomberg's reporting cited by TechCrunch.
- This is Fal's Series F. The company announced a Series E at the same time, and the two rounds together brought in $1.65 billion.
- Sequoia led the earlier round.
- Bloomberg also reported that Fal's annualized revenue passed $800 million earlier this year.
What is driving it
The source ties the round to rising demand for inference, which means running an already trained model to produce outputs. The demand comes in particular from customers who rely on open source models. Fal is one of several inference companies growing quickly and raising money at higher valuations. TechCrunch names Baseten, Fireworks AI and Modal among them.
The catch
According to several people familiar with these companies' financials, gross margins in the inference business remain thin. The reason given is the high cost of buying or leasing compute. A large valuation and fast revenue growth therefore do not mean the providers are earning wide margins on each request.
About the company
Fal was co-founded in 2021 by Burkay Gur, formerly a machine learning leader at Coinbase and an engineer at Oracle, and Gorkem Yurtseven, who previously worked as a developer at Amazon.
What the source does not say
The report does not mention new Fal products, price changes or how the money will be spent. Any effect on customer pricing is unconfirmed.
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