Fal raises $1.3B at a $16B valuation, doubling its April price

Fal, a San Francisco-based startup that hosts and runs AI video, image and audio models, has raised $1.3 billion in a round led by Bessemer Venture Partners. Nvidia, Sound Ventures and T. Rowe Price also participated.

The deal values the company at $16 billion, twice the $8 billion valuation it had in April, according to Bloomberg. Fal announced its Series E and Series F rounds at the same time, with a combined $1.65 billion raised across both. Sequoia led the earlier round.

Bloomberg's report noted that Fal passed $800 million in annualized revenue earlier this year. Fal was co-founded in 2021 by Burkay Gur, a former Coinbase machine learning leader and Oracle engineer, and Gorkem Yurtseven, previously a developer at Amazon.

The round comes amid strong demand for inference services, particularly from customers who rely on open source models. Inference is the process of running a trained model to produce outputs, and Fal's specialty is media generation across video, image and audio.

Fal is not alone. Baseten, Fireworks AI and Modal have also grown quickly and raised large rounds at higher valuations. TechCrunch, citing several people familiar with the companies' financials, reports that their gross margins remain thin because buying or leasing compute is expensive.

That tension is worth noting: revenue growth is strong, but the valuations assume these companies can eventually keep more of each dollar they bring in. The coverage does not say what Fal's own margins are.

The coverage does not point to specific next steps. The open question is whether inference providers can improve margins as their revenue scales, given the compute costs that currently limit them.