Fal announced a $1.3 billion Series F round led by Bessemer Venture Partners on 3 November at a $16 billion valuation, twice its April valuation, TechCrunch reported. The San Francisco-based company hosts and runs AI image, video and audio models for customers. It announced the Series F alongside an earlier Series E, saying the two rounds raised a combined $1.65 billion.
Key points
- Bessemer led the $1.3 billion Series F, with Nvidia, Sound Ventures and T. Rowe Price participating.
- The $16 billion valuation is double the $8 billion valuation reported for Fal’s April financing.
- Chief executive Burkay Gur says Fal imposed customer rate limits over the summer when demand exceeded its computing capacity.
Series F follows Fal’s April financing
Nvidia, Sound Ventures and T. Rowe Price joined Bessemer in the latest round. The financing puts Fal’s price at $16 billion, compared with the $8 billion valuation attached to its April raise. Fal announced both the Series E and Series F on 3 November, although the rounds took place at different times.
Fal raised the $1.3 billion in October, according to Traders Union, which also named HOF Capital among the investors. Fal raised $350 million in April in a round led by Sequoia at an $8 billion valuation. Sequoia led the earlier round, TechCrunch also reported.
Talia Goldberg, a Bessemer partner, is joining Fal’s board as part of the latest financing. The funding is intended to help expand Fal’s computing capacity.
Gur describes Fal’s summer rate limits
Fal sells inference services: it runs models that have already been trained to produce outputs. Its platform hosts image, video and audio models for creators and developers. Customer demand, particularly from users of open-source models, has increased demand for those services.
Burkay Gur, Fal’s chief executive and co-founder, said the company raised a large amount partly because it needed more computing power. Gur said Fal could not serve all its customers over the summer and imposed rate limits. Those limits restricted customer usage rather than adding capacity to meet the demand he described.
Fal was founded in 2021 by Gur and Gorkem Yurtseven. Gur previously worked in machine learning at Coinbase and as an engineer at Oracle, while Yurtseven was a developer at Amazon. The company now sells the computing needed to run models, rather than the model-training work that precedes inference.
Fal passes $800 million annualised revenue
Fal surpassed $800 million in annualised revenue earlier this year, TechCrunch reported. The figure describes revenue at an annualised rate. The company’s latest financing comes as it seeks more computing capacity for the inference workloads that generate that revenue.
Fal and other inference providers compete for computing resources. Baseten, Fireworks AI and Modal have also been growing and raising funding at higher valuations. Traders Union reported that Modal and Baseten had been in discussions to raise capital at high valuations.
Buying or leasing compute is costly for inference providers, and their gross margins remain thin, according to several people familiar with those companies’ finances who spoke to TechCrunch. Fal’s latest round brings in capital for capacity expansion after the customer limits Gur described.
