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Groq raises $350M to fuel its pivot from AI chips to neocloud

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Startup Groq has raised $350 million as it continues to pivot from an AI chipmaker to a neocloud company that provides powerful GPUs and AI infrastructure services. 

The new capital, led by investment firm Disruptive with planned participation from Nvidia, values the company at $3.5 billion. That’s down from the $6.9 billion Groq was valued at last September, just a few months before Nvidia hired the startup’s founder and CEO, Jonathan Ross, and other top talent as part of a licensing deal. 

A spokesperson for the company told TechCrunch that despite the difference in valuation, the company doesn’t see it as a down round, but rather as establishing a new valuation for the “post-Nvidia-lincensing-deal version of Groq.” 

Groq was focused on building its own chips, dubbed LPUs (language processing units), to compete with Nvidia on inference — the type of compute needed to run AI workloads in real time. After it lost its star team, Groq shifted from being a pure AI chipmaker into a cloud and data center provider that operates Nvidia systems, making the remaining Groq company an Nvidia customer. 

In June, Groq raised a $650 million round to kick off its pivot. The company intends to scale from 54 megawatts to more than 200 megawatts by 2027.

Today, Groq operates 13 data centers across North America, Europe, the Middle East, and Asia Pacific, serving more than 6 million developers, enterprises, and AI-native companies. Groq says the fresh funds will support “those seeking usage of medium and larger sized clusters of Nvidia accelerated computing for training and inference.” 

“We are building Groq into the world’s leading AI inference cloud,” Alex Davis, Groq’s chairman and CEO of Disruptive, said in a statement. “Inference will without a doubt become the largest and most critical layer of AI infrastructure.”

While inference is in high demand as enterprises scale AI workloads, it’s an open question whether neoclouds will be a profitable enough business to provide returns on their considerable investment in the long term. CoreWeave reported strong second-quarter revenue growth and recently landed major contracts, including with Meta and Anthropic. However, investors remained concerned about the company’s high capital expenditures, heavy reliance on debt, and exposure to rapidly depreciating hardware, and its ability to turn growth into free cash flow. 

Groq’s financials are still private for now, but its pivot puts the company directly inside Nvidia’s AI infrastructure ecosystem. That’s not exactly a unique relationship among neoclouds today. Nvidia supplies the GPUs powering clouds from CoreWeave, Lambda, and Nebius, while also investing billions into some of those companies as they race to build more capacity.

TechCrunch has reached out to Groq for more information.

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Nvidia investing $1.5B in SoftBank data center developer behind OpenAI project

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Nvidia said on Monday that it will invest $1.5 billion in SB Energy, a data center linked to SoftBank and OpenAI.

The investment ensures that Nvidia will be the sole supplier of compute infrastructure at OpenAI’s Ports-Pike data center near Cincinnati, Ohio. Nvidia will also provide up to $105 billion in credit to help build the facility, which could scale from an initial 4.25 gigawatts to 8 gigawatts in size, according to documents the company filed with the SEC.

SB Energy’s existing investors include SoftBank and OpenAI. SoftBank had previously held $5.8 billion worth of Nvidia stock, which it sold in November to help fund other AI investments.

The data center and power developer will build a 9.2 gigawatt natural gas power plant on the site, which is land owned by the U.S. Department of Energy. The site previously enriched uranium for the U.S. nuclear arsenal and for U.S. Navy submarines.

The power plant is expected to cost $33 billion. The steep sum reflects the skyrocketing costs of building natural gas power plants, which have risen 66% in the last two years, according to BloombergNEF.

By the time SB Energy’s power plant and others are completed, they’ll be competing for natural gas with export markets, a confluence that could triple natural gas prices in some parts of the country.

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Terra Industries closes $52M seed round to build defense infrastructure for the Global South

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African defense tech company Terra Industries on Monday announced an additional $18 million in funding, bringing its seed round to $52 million. Investors in the round include Joe Lonsdale’s 8VC, Silent Ventures, and Nova Global. 

Since its launch back in 2024, Terra has become one of the hottest names in the African defense tech space, with plans to build autonomous systems and other infrastructure like drones and mine-detecting combat vehicles. The company says it’s on track to book $100 million in contracts — including at least one federal contract — and generate revenue in the tens of millions of dollars by the year’s end. 

Earlier this year, Terra announced back-to-back funding rounds of $11.75 million and $22 million, respectively. 8VC is also a backer of U.S. defense heavyweight Anduril, which is said to be in talks to raise funding at a $100 billion valuation, as well as Shield AI. 

Terra said its competition right now is any defense company that has won government contracts, especially suppliers from Turkey, China, and the West.

As TechCrunch previously reported, although terrorism remains one of Africa’s biggest threats, many of the countries in the continent depend on the West, Russia or China for security intelligence. Countries in this region often work with numerous international contractors, meaning their defense supply chains are fragmented and therefore easily destabilized.

Terra says it wants to solve that by becoming the biggest player in the ecosystem for equipping countries with military and critical defense infrastructure. 

The startup will use the fresh capital to expand manufacturing across the Global South, open a London office, hire more, and accelerate product deployment. It also hopes to open an office in San Francisco and build a presence in Washington, D.C. to better access capital and U.S. partnerships.

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WordPress.com targets the next generation of web creators with a free student plan

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WordPress.com maker Automattic is expanding into education with a new, free product designed for teachers and their classes called WordPress.com Education. The suite for classrooms includes a full WordPress.com domain for each student, plus free domain names (on the .blog or .art domains) and plug-in support.

Teachers can provide students with access to the program for free for the first year, without having to put a credit card down or enter a trial.

This allows teachers to use the technology in courses that teach students how to build websites, or for other classroom needs such as group projects that incorporate website-building.

Unveiling the product at its annual WordCamp US conference on Monday, the company noted that the new Student plan isn’t a stripped-down version of its product. It includes 6 GB of storage, backups, staging sites, and other tools, as well as support for plugins, SFTP/SSH, phpMyAdmin, and Studio Sync.

Image Credits:Automattic/WordPress.com

Automattic’s best known for its website and blog hosting service, WordPress.com, which runs the open-source WordPress software that powers about 43% of all sites on the Internet. Despite its ubiquity, though, WordPress is not necessarily the go-to platform of choice these days for young people establishing their web presence for the first time. Instead, those users often opt to simply set up social media profiles.

More importantly for Automattic, the student plan will let WordPress be integrated into the classroom to train the next generation of website professionals. And, because it’s free, it can make inroads in underfunded schools as well.

When the first year of use has ended, students can choose to subscribe to the service for $2 per month ($24/year). If they don’t, their work won’t disappear; their site will just drop down to a free WordPress.com site on a free domain. All their web pages, posts, comments, and uploaded media will stay intact.

The company says it piloted the program with 5,000 students across 27 countries, and the majority of educators (88.9%) said access to the program improved their students’ employability. A further 81.5% apparently said the program improved students’ entrepreneurial capacity.

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