AI Startup Black Forest Labs Shoots for $4 Billion Valuation

AI startup Black Forest Labs is reportedly seeking a $4 billion valuation in a new funding round.

The German image generation company is in talks to raise between $200 million to $300 million, the Financial Times (FT) reported Sunday (Sept. 28), citing three sources familiar with the matter.

According to the report, Black Forest has already raised an undisclosed amount of funding valuing the artificial intelligence (AI) company at $1 billion. PYMNTS has contacted Black Forest for comment but has not yet gotten a reply.

FT characterizes Black Forest, which launched a little more than a year ago, as one of the few European companies developing its own AI models, along with the French company Mistral.

Black Forest has collaborated with Mistral to provide image creation tools in its Le Chat app, with both companies making some of their AI systems available under “open source” licenses, the FT report added.

The report also noted the explosive demand for image-editing AI systems following Google’s release of its “Nano Banana” model in August, which helped launch the company’s Gemini app to the top of the iPhone App Store charts in several markets.

The news comes a few weeks after reports that Mistral approaching the close of a funding round in which it would raise around $2.3 billion, valuing the company at roughly $14 billion.

In other AI news, PYMNTS wrote last week about the way agentic artificial intelligence is “transforming how businesses modernize, how software is developed and how rules are established.” At the same time, adoption is being held back by concerns over verification, trust and the price tag that comes with redesigning legacy systems.

Among the voices sounding caution is Palo Alto Networks CEO Nikesh Arora. As covered here, he warned that enterprises may delay adoption unless controls “built into agentic browsers … oriented around credentials and enterprise security” are put in place.

“His view underscores the need to embed trust and identity frameworks before unleashing autonomy at scale,” PYMNTS wrote.

This perspective also lines up with Bloomberg Intelligence, which has projected that while banks see agentic AI shrinking operating costs by 5-10% over the next five years, governance and legacy system complexity could curb broad deployment.

All the same, the broader market is already displaying confidence. As PYMNTS reported, corporate America is spending heavily in this area. Moody’s reduced credit memo preparation time from 40 hours to two minutes by deploying modular agents, while Walmart is looking into the use of agents in supply chain orchestration.

“These are not pilot experiments but reengineered workflows,” the report added.