San Francisco-based Fal has raised $1.3 billion in a funding round led by Bessemer Venture Partners, valuing the AI company at $16 billion—twice its $8 billion valuation in April. The round closed in October, with Nvidia, T. Rowe Price, Sound Ventures and HOF Capital participating.
Fal provides inference services, running trained AI models to generate video, images and audio for developers. Demand has surged, particularly among customers using open-source models, and the company's annualised revenue exceeded $800 million earlier this year. That figure represents its revenue pace expressed as a yearly amount, rather than completed full-year sales.
Chief executive Burkay Gur said demand outstripped Fal's capacity during the summer, forcing it to restrict customers' usage. The company intends to direct the proceeds towards additional computing power and expansion of its 185-person workforce. It has also begun fine-tuning video models with their creators, sometimes receiving licensing fees or a share of revenue.
Fal announced its Series E and Series F rounds together, reporting a combined $1.65 billion raised. Sequoia led the earlier round, while the latest $1.3 billion financing was Series F. Gur co-founded the company in 2021 with Gorkem Yurtseven, previously a developer at Amazon.
Other inference providers, including Baseten, Fireworks AI and Modal, have also attracted substantial funding at higher valuations. However, according to people familiar with these businesses' finances, gross margins remain thin because purchasing or leasing computing resources is expensive.
