Fireworks AI raised $1.505 billion in a Series D funding round on Thursday, valuing the company at $17.5 billion, as demand grows from companies looking to build and deploy customized AI models at lower cost than frontier alternatives.
Atreides Management, Index Ventures, and TCV led the round. Nvidia $NVDA, Lightspeed Venture Partners, Evantic Capital, Bessemer Venture Partners, Menlo Ventures, Insight Partners, Ontario Teachers' Pension Plan, and Lone Pine Capital also participated, the company said.
The fundraise coincides with Fireworks crossing the $1 billion threshold in annualized revenue, a figure that has grown fivefold compared with the previous year. Token volume on its platform has climbed to more than 40 trillion per day from 15 trillion over the same stretch, according to Reuters. The company last raised $250 million at a $4 billion valuation in October.
Fireworks co-founder and CEO Lin Qiao said the company's cost advantage over equivalent closed models is a key driver of growth. "Our cost compared with the equivalent-quality closed model is five to 10 times cheaper," Qiao told CNBC. Rising costs for the latest AI models have made finance executives increasingly uneasy, prompting them to steer employees toward open-source options.
Founded in 2022 by Qiao and six co-founders, all former Meta $META engineers, Fireworks offers infrastructure that lets enterprises fine-tune general-purpose models on their own data and serve them in production. The company's workforce stands at roughly 200, and Qiao said she plans to triple that figure before the year is out.
Customers include Uber $UBER, Shopify $SHOP, Doximity, Elastic, GitLab, and MongoDB $MDB, according to Reuters. Legal AI company Harvey and coding tool Cursor have also built on the platform, the company said. Fireworks competes with Together AI and Baseten in the AI inference cloud market.
In March, Fireworks announced a partnership with Microsoft $MSFT that allows Microsoft customers to access models through Fireworks' platform, which draws on computing capacity from more than 20 suppliers, according to CNBC.
"We believe both frontier and open models will increasingly be used together," said Gavin Baker, CIO and managing partner at Atreides Management.
Fireworks said the new capital will be used to expand compute infrastructure, grow its engineering team, and deepen partnerships with cloud providers including Microsoft and Nvidia.