Nvidia-backed Fireworks hits $17.5 billion valuation as demand for cheaper AI models surges

Nvidia-backed startup Fireworks valued at $17.5 billion in latest funding

July 16 (Reuters) - Nvidia-backed AI infrastructure startup Fireworks said on Thursday it raised $1.51 billion at a $17.5 billion valuation to expand its engineering team and global compute capacity. The Series D funding round was led by investment firms Atreides Management, Index Ventures and TCV. Participants included existing investors like Nvidia (NVDA.O), opens new tab and Lightspeed Venture Partners. Reporting by Rashika Singh and Anzar Mehraj in Bengaluru; Editing by Joyjeet Das Our Standards: The Thomson Reuters Trust Principles., opens new tab

Nvidia-backed Fireworks hits $17.5 billion valuation as companies pursue cheaper AI models

The cost of the latest artificial intelligence models is increasingly breeding anxiety among finance executives, who have started directing employees to consider open-source alternatives. That's boosting cloud startup Fireworks, which competes with Amazon and Google to host models that developers can weave into applications. The Nvidia-backed company said Thursday that it has exceeded $1 billion in annualized revenue, five times what it had last year, and it has now raised a $1.5 billion round at a $17.5 billion valuation. "We're seeing super-linear demand," Lin Qiao, Fireworks' co-founder and CEO, told CNBC in an interview at the company's headquarters in San Mateo, California. "This is a once-in-a-lifetime opportunity to have this kind of market." Fireworks is much smaller than Anthropic and OpenAI, which investors have valued above $800 billion each this year, nor is it close to the top names in technology, whose market capitalizations are counted in the trillions. But the startup's revenue milestone suggests that companies aren't completely satisfied with the models coming out of the top labs. The achievement also presents new evidence that Amazon, Microsoft and Google are not totally dominating in cloud computing. Shares of easy-to-use cloud infrastructure vendor DigitalOcean are up 149% so far this year as growth has accelerated. CoreWeave, which rents out Nvidia graphics processing units, or GPUs, raised $1.5 billion in an initial public offering last year and is now worth $42 billion. By managing computing infrastructure for models, Fireworks does business in the inference cloud market, alongside startups such as Baseten and Together AI. It's also started providing GPUs for training AI models, like neoclouds CoreWeave, Lambda and Nebius.