AI inference startup Fal doubles its valuation to $16B as demand surges

Fal, a San Francisco-based startup that hosts and runs AI video, image, and audio models, has raised $1.3 billion in its latest funding round led by Bessemer Venture Partners, with participation from Nvidia, Sound Ventures, and T. Rowe Price. The deal values Fal at $16 billion, double its $8 billion valuation in April, Bloomberg reported.

The startup announced its Series E & F rounds at the same time, noting that a combined $1.65 billion was raised across both. (Sequoia led the earlier round.)

The latest round (Series F) comes amid soaring demand for inference services, the process of running an AI model that’s already been trained to generate outputs, particularly from customers relying on open-source models. Fal surpassed $800 million in annualized revenue earlier this year, Bloomberg’s report noted.

Companies providing inference services, including Baseten, Fireworks AI, and Modal, have also been growing rapidly and raising large funding rounds at higher valuations. But their gross margins remain thin because of the high cost of buying or leasing compute, according to several people familiar with inference companies’ financials.

Fal was co-founded in 2021 by Burkay Gur, a former Coinbase machine learning leader and Oracle engineer, and Gorkem Yurtseven, who was previously a developer at Amazon.