Blackstone is weighing a fresh funding injection for Nvidia-backed artificial intelligence firm Factory in a deal likely to value the coding company at more than $3.5bn, *City AM *has learned.
The New York-headquartered investment giant, which has been ploughing cash into AI firms and digital infrastructure in recent years, is considering the investment as part of a new funding round for the San Francisco-based start-up, sources told City AM.
Factory creates AI-driven ‘droids’ which automate software coding for companies including Morgan Stanley, EY and Nvidia, which is also an investor.
The deal will mark its third round of funding since September, when it was valued at $300m in a $50m raise backed by investors including Nvidia and JP Morgan. Blackstone then invested in the start-up’s Series C round at valuation of $1.5bn in April, alongside investors including Sequoia Capital, Khosla Ventures and London-based 20VC.
The latest fundraise is likely to fetch Factory a valuation of more than $3.5bn,* *sources familiar with the matter said.
Factory did not respond to requests for comment. Blackstone declined to comment.
Dizzying AI valuations #
A deal would underscore the dizzying pace at which valuations are climbing across the AI sector as well as Blackstone’s aggressive push into the industry in recent years. In a blog post in May, operating chief Rodney Zemmel said companies using AI agents for corporate automation were one of its six key focus areas, alongside areas like content creation and software engineering.
It is also been pumping cash into what it calls the ‘picks and shovels’ of the AI boom, including data centres and digital infrastructure. It the world’s largest private owner of data centres and in the past two months alone revealed plans to invest some $30bn into Japanese data centres and $5bn in a new data infrastructure company with Google.
Founded in 2023 by former Princeton students Matan Grinberg and Eno Reyes, Factory is looking to take on the likes of Anthropic and Claude with its autonomous droids and has been ramping up its international expansion in recent months. In March, it opened its first overseas office in London and has since set up in Sydney.
Speaking after the April deal, Grinberg said “anything that can be done on a computer, can be done with a Droid.”
The company doubled its revenue every month in the six months to April, he said.