Hugging Face, the AI model startup, is in the process of raising funds in a Series D round that could value the company at $4 billion, according to sources familiar with the matter.
The funding round is expected to raise at least $200 million, with Sound Ventures, the venture capital firm led by Ashton Kutcher, currently leading the pack of investors. However, Hugging Face has received multiple offers this week and is reviewing competing term sheets.
Clément Delangue, the Hugging Face CEO and co-founder, is weighing his options and was supposed to decide by last Friday, though things are still in flux and the precise figures may alter. The business might try to raise even more money, possibly up to $300 million, and existing investors might make a last-minute offer as well. According to reports, venture capital firms DFJ and GV (supported by Alphabet) are interested in the investment round.
Just over a year ago, Hugging Face, a company well-known for its large-language models (LLMs), secured $100 million in a Series C round, with Lux Capital serving as the lead investor. Coatue and Sequoia were among the new investors in that round. Hugging Face reached a $2 billion valuation while making less than $10 million in revenue in 2021. The company’s revenue run rate this year has more than tripled from the beginning of the year, reaching between $30 million and $50 million.
Based in Brooklyn, Hugging Face has gained prominence by providing open-source AI models, positioning itself as a “GitHub for machine learning.” The company offers a hub of hundreds of thousands of models that can be accessed and modified by developers.
Hugging Face generates revenue by offering security and corporate tools on top of its model hub. The company’s popular Stable Diffusion model serves as the foundation for Stability AI, another notable AI unicorn.
Hugging Face, GV, Coatue, DFJ, Kutcher, and Lux have all declined to make any comments about the fundraising round. Hugging Face has also failed to remark on it. The projected capital round underscores the continued pattern of big investments in AI businesses, especially those specialising in large-language models.