fal raises $1.3 billion at $16 billion valuation

fal's funding comes after a period of rapid growth. Annualized revenue passed $800 million earlier this year, and the company told Bloomberg that demand had surged to the point where it had to rate-limit customers in the summer. That strain explains why the new capital is earmarked for computing power and hiring, rather than for building a model from scratch; pretraining a model of fal's own is not on the near-term agenda, according to co-founder and CEO Burkay Gur.

The round also folds in an earlier raise. Today's announcement covered an April round led by Sequoia Capital, which raised $350 million at an $8 billion valuation, and fal said the two rounds come to $1.65 billion combined. With previous funding, investors have now put more than $1.9 billion into the company.

The valuation places fal just behind rival inference provider Fireworks AI Inc., which closed $1.5 billion in funding at a $17.5 billion valuation in July. Across the inference sector, gross margins remain thin because compute is expensive to buy or lease, according to people familiar with the finances of inference companies who spoke to TechCrunch. Fal's ability to improve margins while scaling may depend on how efficiently it uses the new capital, though the company has not disclosed specific margin figures.