The AI model startup is reviewing competing term sheets for a Series D round that could raise at least $200 million at a valuation of $4 billion, per sources.

Hugging Face is raising a new funding round that is expected to value the high-flying AI startup at $4 billion, multiple sources with knowledge of the matter tell Forbes.

The Series D funding round is expected to raise at least $200 million, two sources said, with Ashton Kutcher’s venture capital firm, Sound Ventures, currently leading an investor scrum. But cofounder and CEO Clément Delangue is shopping around as the company has received multiple offers this week, four sources added.

Delangue was expected to pick a preferred offer as soon as Friday, according to another source, who noted that the situation was still fluid, meaning no agreement has been reached, and the numbers involved could change. Several other sources, who asked to remain anonymous as they weren’t authorized to talk about the deal, said that Hugging Face could seek to raise more, as much as $300 million, while existing investors could still attempt to take the round in a last-minute bid. GV, the venture firm backed by Alphabet, and DFJ were said to be looking at the round, one source added.

Hugging Face didn’t respond to requests for comment. GV declined to comment. Coatue, DFJ, Kutcher, and Lux also didn’t respond.

The anticipated funding is the latest exclamation point in a cash frenzy for promising AI companies, particularly those providing large-language models, or LLMs, that power them. Just over a year ago, Hugging Face raised $100 million in a Series C round led by Lux Capital; Coatue and Sequoia were new investors in that round, joining A.Capital Ventures and Addition. The company had attained a $2 billion valuation in that round despite taking in less than $10 million in revenue in 2021. Its revenue run rate has spiked this year and now sits at around $30 million to $50 million, three sources said — with one noting that it had more that tripled compared to the start of the year.

Named after the emoji of a smiling face with jazz hands, Brooklyn-based Hugging Face has grown quickly by offering what Delangue has described as a “GitHub for machine learning.” It is a central company in a growing movement of AI models that are open sourced, meaning that anyone can access and modify them for free. Hugging Face makes money by charging for security and corporate tools on top of a hub of hundreds of thousands of models trained by its community of developers, including the popular Stable Diffusion model that forms the basis for another controversial AI unicorn, Stability AI. (On Thursday, a Stability AI cofounder sued CEO Emad Mostaque, alleging he was tricked into selling his stake for next to nothing.) Per a Forbes profile in 2022, Bloomberg, Pfizer and Roche were early Hugging Face customers.

Earlier this year, Delangue warned that model providers reliant on paying huge sums to Big Tech’s cloud providers would function as “cloud money laundering.” But training and maintaining models — and building enterprise-grade businesses around them — remains costly. In June, Inflection AI raised $1.3 billion, in part to manage its Microsoft compute and Nvidia hardware costs; the same month, foundation model rival Cohere raised $270 million. Anthropic, maker of the recently-released ChatGPT rival Claude 2, raised $450 million in May. OpenAI closed its own $300 million share sale in April, then raised $175 million for a fund to back other startups a month later, per a filing. Adept became a unicorn after announcing a $350 million fundraise in March. Stability AI, meanwhile, met with a number of venture firms in the spring seeking its own new up-round, industry sources said.

At a $4 billion valuation, Hugging Face would vault to one of the category’s highest-valued companies, matching Inflection AI and just behind Anthropic, reported to have reached closer to $5 billion. OpenAI remains the giant in the fast-growing category, Google, Meta and infrastructure companies like Databricks excluded; while its ownership and valuation structure is complex, the company’s previous financings implied a price tag in the $27 billion to $29 billion range.

Speaking for another Forbes story on the breakout moment for generative AI tools, Delangue predicted, “I think there’s potential for multiple $100 billion companies.”