Fal, a company that runs AI video and image tools, is now worth $16 billion

Fal, a San Francisco startup that hosts and runs AI video, image and audio models, has raised $1.3 billion. The deal values the company at $16 billion, double the $8 billion it was worth in April, Bloomberg reported. Bessemer Venture Partners led the round. Nvidia, Sound Ventures and T. Rowe Price also joined.

What Fal does

Fal does what the industry calls inference. That means running an AI model that is already trained so it can produce results, such as a picture or a video clip. Other companies pay Fal to do this instead of running the computers themselves. Demand is rising, especially from customers who use open-source models, which are AI models anyone can download and use.

Fal announced its Series E and Series F rounds together. Across both, it raised a combined $1.65 billion. Sequoia led the earlier round. Bloomberg also reported that Fal passed $800 million in annualized revenue earlier this year. The company was co-founded in 2021 by Burkay Gur and Gorkem Yurtseven.

What is not known

Rivals such as Baseten, Fireworks AI and Modal are also growing fast and raising large rounds. But people familiar with their finances say profit margins on these services are thin, because buying or renting computing power is expensive. The material does not say how Fal's own margins look, how it will spend the money, or whether prices for AI tools will change. If costs stay high for hosting firms, that could eventually show up in what people pay for AI services.