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German AI Startup Black Forest Labs Raises $300 Million at $3.25 Billion Valuation

BERLIN - Germany's Black Forest Labs, an artificial intelligence startup specializing in image generation, has raised $300 million in a new funding round, underscoring the growing momentum behind Europe's AI sector.

The company's $3.25 billion valuation marks one of the largest investments in a Europe-based AI startup this year, as venture funding for the continent's tech companies continues to scale up. New backers Salesforce Ventures and Anjney Midha co-led the financing, which also included participation from a host of high-profile investors such as Andreessen Horowitz, NVIDIA, Temasek Holdings, and Bain Capital Ventures.

Founded in 2024 and headquartered in Freiburg, Germany, Black Forest Labs has now raised a total of $450 million, according to Crunchbase data. The startup is known for its Flux foundation models of AI generation, which it claims are "the most popular image models" on Hugging Face, the open-source AI platform. The company says its technology helps not only generate images, but also edit them, putting it in competition with tools from tech giants like Adobe, Canva, Meta, and Microsoft.

"Black Forest Labs' rapid growth underlines the rising ambition and capabilities of Europe's AI ecosystem," said Martin Schroeter, a senior analyst at Goldman Sachs Asset Management. "While the continent still lags behind the U.S. and China, deals like this demonstrate the region's potential to produce world-class AI companies."

Europe saw $5.2 billion invested in its AI startups in the third quarter of 2025, up from $2 billion in the same period last year, according to Crunchbase. However, that remains a fraction of the sums flowing into the sector in the U.S. and China, the global leaders in AI development and deployment.

Experts say Europe's challenge is to translate its strengths in areas like deep tech and scientific research into commercially successful AI businesses that can compete on the global stage. Supportive government policies, access to talent, and a growing pool of risk capital will all be crucial.

"Black Forest Labs is an example of the kind of ambitious, technically-advanced AI company that Europe can produce," said Anjney Midha, a partner at AMP who co-led the funding round. "With the right backing and ecosystem support, we believe European startups can make major strides in this crucial technology area."