If there’s one thing that France can’t get enough of at the moment, it’s AI.
Largely driven by the blockbuster fundraising rounds completed by Paris-based Mistral AI, which less than a year after launching has bagged nearly €500m, the excitement among investors and founders is palpable. For many, this might well be France’s chance to become relevant on the global tech stage.
But to focus only on the newest entrants to France’s AI scene would be to miss a well-established success story in the sector — one that is already eight years old. With a caveat: it is actually HQ-ed in the US.
Launched in New York in 2016 by a trio of French founders, Hugging Face has built a platform that hosts AI models and provides tools for engineers to build, train and deploy the technology for their own use cases.
Hugging Face focuses on open source technologies, meaning that users share the code behind the models and are encouraged to collaborate with each other to build new ones. Over the years, the platform has found traction among AI developers — and now registers 1m monthly active users, according to cofounder Julien Chaumond.
“We are the GitHub of machine learning,” he says.
The company has raised nearly $400m to date from a host of high-profile US VCs like Sequoia Capital and Coatue. Its latest round, a $235m Series D closed last year, included participation from tech’s biggest names — Google, Amazon, Nvidia, Intel, AMD, Qualcomm, IBM and Salesforce — at a reported $4.5bn valuation.
And although Hugging Face firmly considers itself a Franco-American company, its founders say that such success could not have been possible within the confines of Europe.
“Raising money in the US remains something that, beyond the money itself, is unavoidable if you want to do something with a global ambition,” says Chaumond.
A Franco-American story
Hugging Face’s story started in 2016 in the French capital.
During his time as a software engineer at Paris-based startup Stupeflix, Chaumond reconnected with Thomas Wolf, who he knew from engineering school. “We used to play together in a rock band,” says Chaumond. “We did Alanis Morissette covers. It was very short-lived.”
Together with Clément Delangue, who Chaumond knew already, the three founders launched Hugging Face — which refers to the company’s logo, a smiling emoji with open hands — with a very different pitch: originally, they wanted to build an AI-powered chatbot for teenagers.
The team moved across the Atlantic to officially set up the company after signing a first $200k ticket from US investor betaworks and securing a spot in the VC’s chatbot-focused startup accelerator programme in New York.
“We could never have raised money in France with this kind of consumer project, with no monetisation, saying we were creating a virtual friend for teenagers,” says Chaumond.
“French and European VCs are still one step behind in terms of the risks they are taking. Whereas in the US, investors were saying: ‘This looks completely half-baked but fun, here’s a ticket.’
“They are much more relaxed when it comes to what they perceive as risky.”
Growing up in the US
Hugging Face pivoted in 2019, just after Google researchers released an open source model named BERT, which set a new standard in one application of AI called natural language processing (NLP).
The company’s engineers created and open-sourced a version of BERT that was easier to use than the academic model from Google, and released it on a new Hugging Face platform. “We saw a huge impact on the traction this created in our community,” says Chaumond.
Fast-forward a few years and several rounds of fundraising, largely with US VCs, and Hugging Face has become a global hub for developers, who use the platform to access and share the building blocks of AI models.
Although the models are free, the company monetises some premium features — such as access to cloud computing services through partnerships with providers like AWS. Hugging Face does not disclose its revenues.
Chaumond says that the majority of the company’s revenue comes from deals signed with US companies. Players like Meta, Amazon, Microsoft, Google and Intel all use the platform.
French roots
After building a reputation stateside, attention at home is picking up. But “they are still much more famous in the US,” says one investor in open source technologies.
Hugging Face remains faithful to its French roots: the company’s Paris office, where Chaumond is based, hosts the company’s biggest team. Of a total workforce of 180, 70 people are based in the French capital — and another 50 are spread across Europe. “Value creation is not defined by a company’s HQ,” says Chaumond.
It’s also a strategic move, with talent in the French capital abounding at a much cheaper cost than across the Atlantic — while equity options in a US company are a particularly attractive proposition for European employees.
As a growing number of AI startups in France also start making a name for themselves, from Mistral to Photoroom through Poolside and Nabla, Hugging Face is increasingly being showcased as an early example of a French success story — as well as a mentor for future AI entrepreneurs.
Chaumond, who side hustles as an angel investor, says that things have picked up significantly since the plans for an AI chatbot for teenagers back in 2016.
“A decade ago, we were a small minority that came out of university and launched startups [in France],” he says. “Now, it’s almost the default option if you’re not sure what to do.
“You start a company, and you do it in AI because that’s what’s hot at the moment — and that’s a good thing.”
Early signs are even indicating that Hugging Face is becoming a founder factory. Last month, Paris-based AI startup Adaptive, which was founded by ex-Hugging Face researchers and engineers, raised a $20m seed round.
In the US, former Hugging Face employees have also launched AI startups Contextual and Arcee, and Chaumond anticipates more will come.
But although things are moving fast, his advice remains the same.
“There is more money in Europe now, but I’ve been completely blown away when talking with some of our investors in the US,” he says. “It’s another level of game, and that’s still the case.”
