Grok image generator Black Forest Labs raises $100M at $1B valuation, sources say

While OpenAI is pursuing another monster fundraising round, it’s not taking up all the oxygen in the room: AI startups building promising baseline models can still open doors and checks. Multiple sources tell us that Black Forest Labs — a startup that builds generative AI image models and came out of stealth two months ago with $31 million in funding — is closing on new funding. We’re hearing about a $100 million round at a $1 billion valuation. The deal may not be final, so it’s still subject to change.

Black Forest isn’t just any AI startup: It was founded by the engineers who created the technology behind Stability AI. And it has a famous customer. Elon Musk’s X.ai uses Black Forest’s Flux.1 text-to-image model to generate images in its Grok chatbot, a service that got people talking as soon as it launched, in part because of the bold results people were seeing with it.

“No Filters” still feels like a big deal a month later. We created the image on the right earlier this week.

The company is also attracting investor attention because of its founders and founding team. They include Andreas Blattmann, Patrick Esser, Dominik Lorenz and CEO Robin Rombach, researchers who created Stability AI, considered a groundbreaking image generation platform.

“Robin Rombach is known as the absolute expert in image diffusion models, and when you have someone so intelligent and proven in a completely new field, it’s obvious that he’s worth investing in if the opportunity arises,” one of the company’s investors told TechCrunch.

It’s not yet clear who’s investing in the Freiburg, Germany-based startup’s latest round. One source mentioned that Lightspeed — one of Europe’s most prolific AI investors, backing Helsing, Mistral, Stability AI, and others — could be involved. Lightspeed has not yet responded to a request for comment, nor has Black Forest itself. (We’ll update the post if they do.)

The company’s previous funding round, $31 million, featured a high-powered list of investors. Led by Andreessen Horowitz, others include General Catalyst and Stuttgart VC Mätch.vc, according to PitchBook data, as well as Nvidia’s Timo Aila, Oculus co-founder Brendan Iribe, Apple AI research scientist Vladlen Koltun, entertainment mogul Michael Ovitz and Y Combinator’s Garry Tan.

The $1 billion valuation is a big increase from its post-fundraising valuation of a more modest $150 million in its last round. (Andreessen Horowitz declined to comment on the additional funding for this article.)

Rapid fundraising in the generative AI space has become commonplace in today’s market: Startups building these tools need funds to buy computing power, hire talent, perhaps secure IP licensing deals, and do marketing and business development to compete with larger and even better-funded players. For Black Forest Labs, more tech launches are coming soon. The company has already said it’s working on a cutting-edge text-to-video tool, with no release date yet.

But the market has been tough and sometimes unkind to some of the smaller AI players who have raised a lot and are now under pressure to deliver. H in Paris, a generative AI startup founded by DeepMind alumni, raised $220 million in May of this year. It has already lost three of its five co-founders, reportedly over operational differences. Aleph Alpha, which has raised more than $500 million, appears to have pivoted to enterprise services rather than building basic models.

“Being in the spotlight, being in the spotlight, but not living up to expectations” is how another investor who spoke to TechCrunch described the difficult situation companies like Aleph Alpha and H. find themselves in.

Black Forest Labs will naturally try to avoid such problems, especially since it lacks — at least for now — a strategic investor who could back it with a ton of cash to grow more aggressively. That same investor said, “I think they’ll try to go down a different path, one that’s as secretive as possible.”