Applied Compute in talks to double valuation to $3B on open-source demand
What's the deal? Applied Compute, a year-old startup that helps companies customise open-source AI models, is in talks to raise a Series C round that would value it at around $3 billion, according to a person with knowledge of the deal. That is more than double its valuation from a round announced four months ago.
Who's backing it? Investor Elad GilDealroom has a profile for this one. Try Dealroom → is in talks to lead the round, which will likely be in the hundreds of millions of dollars. The financing has not closed, and its terms could change.
The numbers: Applied Compute is generating around $50 million in annualised revenue, up nearly four times from what chief executive officer Yash Patil said the startup was generating last November. It has previously raised $160 million from investors including Kleiner Perkins, Benchmark, Sequoia CapitalDealroom has a profile for this one. Try Dealroom →, and Lux Capital.
What's the endgame? Founded in 2025 by former OpenAI researchers Patil, Rhythm Garg, and Linden Li, the San Francisco startup helps businesses train custom AI models for fields such as financial services and law. It uses reinforcement learning, which rewards models for hitting goals and penalises unwanted behaviour.
Its customers include DoorDash, coding startup CognitionDealroom has a profile for this one. Try Dealroom →, and data labelling firm Mercor, which use the custom models to build AI agents that act on behalf of workers. The startup makes money by selling consulting services and charging customers for compute to run the models on its infrastructure.
Why now? The raise comes amid rising interest from companies looking to cut AI costs by customising open-source models rather than paying for AnthropicDealroom has a profile for this one. Try Dealroom → and OpenAI models.
The signal: That demand has lifted a cluster of startups, including OpenRouter, which helps developers choose between hundreds of models, and inference providers Baseten and Fireworks. Applied Compute's fourfold revenue jump — and doubled valuation in four months — shows how quickly capital is chasing the open-source model layer.
Read more: The Information
Image credit: Applied Compute
