CoreWeaveA New York City-based startup that started as an Ethereum mining company has secured a large tranche of funding as it continues to transition to a general-purpose cloud computing platform.
CoreWeave announced today that it has raised $221 million in a Series B funding round led by Magnetar Capital with participation from Nvidia, former GitHub CEO Nat Friedman, and former Apple executive Daniel Gross. Magnetar put up $111 million, with the rest of the investment split between Nvidia, Friedman and Gross. An Nvidia spokesperson said the investment represents a “deepening” of its partnership with CoreWeave.
The tranche, which values CoreWeave at $2 billion before down payment and brings the total raised by the company to $371 million, will be used to support the expansion of CoreWeave’s data center in the US with the opening two new centers this year, CEO Mike Intrator said. CoreWeave currently operates five in North America.
CoreWeave was founded in 2017 by Intrator, Brian Venturo, and Brannin McBee to address what they considered “a gap” in the cloud market. Venturo, a hobbyist Ethereum miner, bought GPUs on the cheap from insolvent cryptocurrency mining farms and chose Nvidia hardware to boost memory (hence Nvidia’s investment in CoreWeave, presumably).
Initially, CoreWeave focused exclusively on cryptocurrency applications. But in recent years it has turned to general-purpose computing, as well as generative AI technologies, such as AI models that generate text.
Fast forward to today and CoreWeave provides access to more than a dozen Nvidia GPU cloud SKUs, including the H100, A100, A40, and RTX A6000, for use cases like AI and machine learning, visual effects and rendering, batch processing and pixel transmission. .
“Our customers include generative AI companies such as Tarteel AI and Anlatan, the creators of NovelAI, and we have supported a variety of open source AI and machine learning projects such as EleutherAI and AI’s Stable Diffusion,” Intrator told TechCrunch in an email interview. . “We also work with a number of notable VFX and animation studios like Spire Animation, and partner closely with 3D broadcast and ‘metaverse’ companies like PureWeb.”
It’s hard for any cloud provider to compete with the incumbents in the space, i.e. Google, Amazon, and Microsoft. For perspective, AWS made $80.1 billion in revenue last year, while Google Cloud and Azure made $75.3 billion and $26.28 billion, respectively.
Those figures are multiples above CoreWeave’s valuation, obviously, not to mention its war chest.
To drive the point home, according to a Statista report as of Q4 2022, AWS had a 32% market share, Azure had a 23% share, and Google Cloud had a 10% share.
That’s not to say it’s impossible for a smaller player to succeed. There are success stories like paper space, scale and Digital Ocean (despite its ups and downs), as well as new entrants such as smart cloud and vultre.
CoreWeave is also evidence of this, it seems. The startup managed to secure funding even after a difficult quarter for the cloud infrastructure market. Like my buddy Ron Miller wroteCompanies looked for ways to cut spending in an uncertain economy, slowing market growth to 21%, a precipitous drop from 36% growth. in the previous year.
“We have more than 1,000 customers across our four key verticals: machine learning and artificial intelligence, batch processing, pixel streaming, and visual effects and rendering,” Intrator said.
CoreWeave argues that the dominant cloud providers (Google Cloud, Azure, and AWS) have failed to meet the demand for generative AI, particularly with their “legacy cloud infrastructure.” Fighting words, to be sure, especially now that AWS releases a dedicated service to serve text generator models. But in the eyes of Intrator, the headlines aren’t set up to meet the demand of thousands of AI startups clamoring for GPUs, at least not at CoreWeave’s (ostensibly lower) prices.
CoreWeave claims that its hardware for inference, i.e. serving AI models, is industry leading, capable of “auto-scaling” in three seconds. It also promotes its newest instance products, which include Nvidia’s HGX H100 server. platform.
“For some time now, technology decision makers have been faced with the increasingly complex and expensive task of implementing their highly specialized computing tasks that support modern AI and machine learning applications for cloud computing providers. more widespread,” Intrator said. “CoreWeave recognizes that this demand will require a large investment in scalable and achievable capacity for the next generation of innovative AI companies.”
Beyond infrastructure, CoreWeave tries to differentiate itself with offerings like its accelerator program, which launched in late October. (Intrator says it has more than 30 members.) Operating in the open, with no deadlines, the accelerator provides enterprises with compute credits as well as discounts and other hardware resources in the CoreWeave cloud.
Intrator says the new stretch will lead to more efforts like this.
“With the rise of CoreWeave and this new investment, you can serve more businesses with even more customized solutions that can outperform legacy cloud providers,” he added. “While large language models and deep learning imaging technologies have been around for a while, their prominent place in the public eye is fueling an intense fight to secure processing power for increasingly powerful applications. CoreWeave recognizes that this demand will require a large investment in scalable and achievable capacity for the next generation of innovative AI companies.”
It will also go towards expanding the CoreWeave team. The company employs “just over” 115 people now, up 150% in the last 12 months, thanks in part to its acquisition of cloud rendering platform Conductor Technologies in January, and Intrator says the plan is to continue hiring “throughout the year”. .”
The question is, of course, whether CoreWeave can keep up its impressive momentum, especially if the generative AI bubble bursts soon. For what it’s worth, Friedman and Gross seem sold on the strategy. They sent this statement by email:
AI is the new electricity and CoreWeave is building the network for the new economy. We have had the pleasure of working for Apple and Microsoft; invest in startups like Stripe, Figma, and Airtable; and with that, we can confidently say that the tempo and pace at which CoreWeave moves is unprecedented. Every day is a race to victory, and it shows in the quality and quantity of their customers. Demand for AI inference is about to explode, and CoreWeave has spent years preparing the infrastructure and culture to scale for this moment.
There is some reason for optimism. According According to a recent ESG survey, 59% of companies plan to spend more on public cloud applications in 2023, while 56% expect spending on public cloud infrastructure services to increase.