We are excited to be investing in Black Forest Labs’ Series B, as part of a $300m round, which will propel frontier visual AI technology into its next phase of growth. Black Forest Labs (BFL) is already being used by millions of creators, developers and forward-thinking enterprises to bring their imagination to life. BFL’s FLUX family of models (FLUX.2 just dropped), is not just for fun; it is designed for real-world creative workflows and generates high-quality images while maintaining character and style consistency. 

With tools like this, we are witnessing the early stages of a major social and technological transformation. We expect to see an explosion of content being generated, where visuals will increasingly be a component of consumer products and experiences. And we expect Black Forest Labs to be powering those visual components.

The calibre of the founders and team has paved the way for Black Forest Labs'  success

Black Forest Labs was founded in early 2024, by founders who had already pioneered state-of-the-art AI image generation. Robin Rombach, Black Forest Labs’ CEO and Co-Founder, and his team were the key researchers behind the development of latent diffusion models and created Stable Diffusion while at Stability AI. The technology they created forms the basis of all the text-to-image generation that we know today. 

What BFL has achieved in the months since it was founded has been remarkable. Their researchers have continued to develop state-of-the-art models, remaining at the bleeding-edge of visual AI and pioneering innovations like turn-by turn-editing. Its FLUX visual AI models have already proved game-changing and are transforming the work of artists, creators, developers and how enterprises conduct their design and marketing.

The small team of around 50 people have built and grown the company very quickly and punched well above their weight to compete with big technology companies and sign mega licensing deals. At Notion, as an investor in European companies, we are delighted to see this breakout story originate in Freiburg, Germany, showing how great European talent is leading globally in AI innovation.

Black Forest Labs stands out because of its B2B focus

Unlike other AI model platforms which target consumers, Black Forest Labs is positioned as the platform of choice for enterprises and developers. As a specialist investor in business software, we at Notion understand the power of this business model. The world’s leading enterprises are already customers of Black Forest Labs using the technology across a variety of embedded visual AI use cases. Partners like Adobe, Canva, Meta and Deutsche Telekom are already integrating FLUX models directly into their creative and enterprise workflows. 

Also, BFL stands out because it is an independent company solely focused on developing visual AI. Unlike its competitors, which are divisions of larger technology companies, BFL is laser-focused on visual intelligence. Image generation is not just one interesting feature it offers tacked onto other products; it is the core product. We see this as a key selling point and anticipate that enterprises will prefer to work with a supplier that is 100% focused on the quality of the product and a reliable partner that can build with them over the long term.

BFL’s technology is the visual AI partner of choice for enterprises

Enterprises are choosing BFL’s technology for a number of reasons. First, the high quality and realism of the output is second to none. BFL consistently leads the pack when it comes to its AI image generation, and its state-of-the-art models are among the most popular in the world. 

Second, the controllability – how well the output can be controlled and edited – is advanced. There is consistency in how the objects in the images retain their characteristics. For fun, one-time generative AI images, this is not so important. But if you are a furniture retailer, for example, and need to showcase the same sofa in different contexts and for various seasonal promotions, that object needs to look exactly the same throughout.

And third, the company has a philosophy of open, responsible development. Their model weights are open source, which means there is transparency in how the model has been created. Developers and enterprises can also self-host the product and train and customise the models to fit their own brand and legal guidelines, as well as their specific use cases.

BFL will power an explosion of visual content

At Notion Capital we believe we’re witnessing a secular shift in how visual content is created and consumed. The adoption of generative visual AI may even compare to the impact the printing press had on the written word.

Throughout history, the volume of visual and image creation has exponentially increased through technological change. Hundreds of years ago, images were commissioned by the privileged few, for religious paintings in churches or portraits in stately homes. With the invention of cameras, a person may have posed for a few photographs to capture pivotal moments in their life. Then came Kodak, the personal camera, which allowed everyone to capture key life moments such as vacations and birthdays. With the advent of digital photography, as well as visual effects like CGI [computer-generated imagery] and Photoshop, software made a break between the reality of what was captured and the image output. Finally with smartphones, everyone became a photographer at any time. With this, image and video creation exploded along with the constant stream of sharing on social media. Now, with generative visual AI, one’s imagination can truly fly. Rather than take a photograph, anyone can prompt with natural language to create endless imagery that brings their imagination to life. 

Pixels will no longer be captured, they will be generated – and we expect Black Forest Labs to be powering that generation of visual content.

We expect to see a multitude of use cases for this technology

BFL offers a state of the art proposition for developers and enterprises, which is seeing unprecedented growth. This, however, is just the beginning and we believe there is more to come. 

We can see a parallel with how the adoption of audio AI has already played out. AI-powered voice generation software removes the need to hire a voice actor or a translator for voice-over work. Normally, we would expect the size of the market to shrink once the cost decreases, but we see Jevon’s Paradox at work here – as the technology gets more efficient and the cost drops, latent demand is unlocked. As a result, more and more content is generated and the total addressable market dramatically expands. We have seen this with audio generation: now that the technology is widely available, new use cases are being created every day.

We have already seen how BFL’s technology cuts production costs of visual content from hundreds of dollars to cents, and the time from weeks to seconds. We believe this will unlock exponential demand for more visual generation and will unleash use cases that we cannot yet imagine. The possibilities are endless and this is only the beginning of the story. 

At Notion, we’re excited to partner with Black Forest Labs in their Series B and be on this journey of bringing visual AI from the Black Forest to the rest of the world.

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