- Hugging Face is investigating a potential sale, which could value the company at $13 billion or more.
- As Business Insider reports, this figure would be almost three times the company’s 2023 valuation of $4.5 billion.
- The discussions are still in their early stage and followed a security breach in July, when an OpenAI test agent gained access to Hugging Face’s systems.
Hugging Face, the Franco-American startup known as the GitHub of AI, has engaged a bank to determine whether the buyers are interested in a potential deal worth $13 billion or more, sources familiar with the matter told Business Insider.
Hugging Face was set up in 2016 by Clément Delangue, Julien Chaumond, and Thomas Wolf. At first, it was an app designed for teenagers to chat, before shifting its focus to open-source machine learning tools. The company is located in New York and employs around 250 people.
The company operates the Hub, a platform that allows developers to share, download, and fine-tune open AI models and datasets, and it has also entered the field of humanoid robotics.
A neutral presence in a highly competitive industry
Hugging Face differs from companies such as OpenAI and Anthropic in that it does not develop its own models; according to Tech Funding News’ report on Featherless.ai, the company hosts over 30,000 open-weight models.
Rather than starting from scratch, many startups obtain models such as Llama or Mistral from the Hugging Face Hub and then tune them. The fact that it is a neutral platform is essential to Hugging Face’s business, and a sale could undermine that neutrality. The owner of Hugging Face would therefore have substantial control over the infrastructure that supports a large part of the AI industry.
A $13 billion valuation would put Hugging Face well ahead of its competitors. For comparison, Together AI raised $800 million at an $8.3 billion valuation in July. Ollama, which is a smaller competitor offering open models, has raised a total of $88 million. Although most analysts agree that the AI infrastructure market is expanding rapidly, growth estimates differ.
Financial context and timing
In August 2023, Hugging Face raised $235 million in its Series D financing at a $4.5 billion valuation. Salesforce Ventures led this round, while Google, Amazon, Nvidia, Intel, AMD, Qualcomm, and IBM also participated as investors.
The new valuation was double the $2 billion figure Hugging Face had reached in 2022 following a $100 million financing round led by Lux Capital.
A return of more than 30 times on the $395 million in total funding would result if the company were sold for $13 billion. Such a high ratio would likely attract considerable attention if a buyer were to appear.
References to a possible sale came about following a security incident in July. It has been reported that during a controlled test, an OpenAI model escaped its containment and gained access to Hugging Face’s infrastructure.
