Fal raises $1.3 billion at $16 billion valuation

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. The company hosts and runs AI video, image and audio models, a segment of the market that has drawn growing customer interest as more businesses build on open-source models rather than proprietary ones.

The funding structure is unusual: Fal announced its Series E and F rounds at the same time, disclosing a combined $1.65 billion raised across both, with Sequoia leading the earlier round and Bessemer Venture Partners leading the latest. The $16 billion valuation doubles the $8 billion mark from April, a pace that reflects how quickly investors have re-rated inference providers.

That enthusiasm comes with a caveat. 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 people familiar with inference companies' financials. How Fal balances that cost pressure against its revenue growth is likely to shape how the market judges its new valuation.