AI inference startup Fal doubles its valuation to $16 billion
San Francisco-based Fal, which runs AI video, image and audio models, has raised $1.3 billion at a $16 billion valuation. Demand for inference services is growing quickly.
Fal, a San Francisco-based startup that hosts and runs artificial intelligence (AI) video, image and audio models, announced on November 3 a new funding round of $1.3 billion. The round was led by venture capital firm Bessemer Venture Partners, with participation from chipmaker Nvidia, Sound Ventures and asset manager T. Rowe Price. The deal values the company at $16 billion, twice its $8 billion valuation in April, Bloomberg reported.
Fal also announced its Series E and F rounds at the same time, which together brought in $1.65 billion. The earlier round was led by Sequoia.
Demand for inference services
The new Series F round comes as demand for inference services is rising sharply. Inference is the process of running an already trained AI model so that it generates outputs. Demand is especially strong among customers relying on open-source models. According to Bloomberg, Fal's annualized revenue surpassed $800 million earlier this year.
Other inference providers, including Baseten, Fireworks AI and Modal, are also growing quickly and raising large rounds at higher valuations. However, their gross margins remain thin because of the high cost of buying or leasing computing capacity, according to several people familiar with the financials of inference companies.
About the company
Fal was co-founded in 2021 by Burkay Gur, a former machine learning leader at Coinbase and an Oracle engineer, and Gorkem Yurtseven, who previously worked as a developer at Amazon.
