Nvidia-backed cloud startup Fireworks announced Thursday it raised $1.5 billion at a $17.5 billion valuation after exceeding $1 billion in annualized revenue. The financing comes as companies increasingly seek cheaper alternatives to expensive proprietary AI models from OpenAI and Anthropic. Fireworks CEO Lin Qiao told CNBC the company's revenue grew five times compared to last year, driven by demand for open-source AI infrastructure that costs five to 10 times less than equivalent closed models.
Fireworks Reports Five-Fold Revenue Growth
Fireworks co-founder and CEO Lin Qiao told CNBC in an interview at the company's San Mateo, California headquarters that the startup is "seeing super-linear demand." The company now employs around 200 people and expects head count to reach 600 by the end of 2026. Qiao said "this is the year when we'll really hit the gas." Atreides Management, Index Ventures and TCV led the funding round, with participation from Nvidia, Evantic and Lightspeed Venture Partners.
Fireworks Competes in Expanding Cloud Infrastructure Market
Fireworks competes with Amazon and Google to host AI models that developers integrate into applications. The company operates in the inference cloud market alongside startups such as Baseten and Together AI, and has started providing GPUs for training AI models. DigitalOcean shares are up 149% this year as growth has accelerated. CoreWeave raised $1.5 billion in an initial public offering last year and is now worth $42 billion. Fireworks relies on computing power from more than 20 suppliers, including Microsoft.
Fireworks Forms Microsoft Partnership and Offers Chinese AI Models
In March, Fireworks announced a partnership with Microsoft, which operates its own Foundry service for running open models. The arrangement allows Microsoft customers to access models through Fireworks. Qiao said "through Microsoft we can get much bigger reach." Fireworks gives developers access to models from Chinese companies including DeepSeek, MiniMax and Z.ai. Open-weight models OpenAI released last year are also available on the platform.
Fireworks Processes 40 Trillion AI Tokens Daily
Fireworks now handles 40 trillion AI tokens per day, according to Qiao. Google disclosed in May that its AI models were processing about 19 billion tokens per minute for developers, implying more than 27 trillion per day. OpenAI announced in March that its developer tools were working through 15 billion tokens per minute, suggesting about 22 trillion per day. Fireworks clients include Cursor, Elastic, GitLab and MongoDB. As of last year, about half of Fireworks' revenue came from AI coding startup Cursor. Qiao said "we are much more diversified right now." In June, Elon Musk's SpaceX agreed to acquire Cursor in a $60 billion stock deal, with the transaction set to close this quarter.
Fireworks Hired Former Salesforce Executive as President
Fireworks hired former Salesforce executive George Hu as its president in April. The startup plans to assemble a sales team after years of having customers sign themselves up. The new funding will help Fireworks obtain more GPUs and hire more technologists. Coinbase CEO Brian Armstrong wrote in a June X post that the cryptocurrency exchange has been adopting cheaper models where appropriate. Qiao, a former Meta director, started Fireworks in 2022 with six co-founders.
FAQ
What valuation did Fireworks reach in its latest funding round?
Fireworks raised $1.5 billion at a $17.5 billion valuation. The Nvidia-backed cloud startup announced Thursday it exceeded $1 billion in annualized revenue, representing five times growth compared to last year.
How many AI tokens does Fireworks process daily?
Fireworks processes 40 trillion AI tokens per day, according to CEO Lin Qiao. This compares to Google's disclosed rate of about 19 billion tokens per minute (over 27 trillion daily) and OpenAI's 15 billion tokens per minute (about 22 trillion daily).
Who led Fireworks' $1.5 billion funding round?
Atreides Management, Index Ventures and TCV led Fireworks' funding round. Other participants included Nvidia, Evantic and Lightspeed Venture Partners.
