December 5, 2023

core braida New York-based startup that started out as an ethereum mining venture, has secured significant funding as it continues its transition to a general-purpose cloud computing platform.

CoreWeave announced today that it raised $221 million in a Series B round led by Magnetar Capital, with participation from Nvidia, former GitHub CEO Nat Friedman, and former Apple executive Daniel Gross. Magnetar contributed $111 million, with Nvidia, Friedman and Gross splitting the rest of the investment. An Nvidia spokesman said the investment represented a “deepening” of its partnership with CoreWeave.

CEO Mike Intrator said the funding, which values ​​CoreWeave at $2 billion and brings the company’s total raised to $371 million, will be used to support CoreWeave’s data center expansion in the U.S., with two new centers opening this year . CoreWeave currently operates five companies in North America.

CoreWeave was founded in 2017 by Intrator, Brian Venturo, and Brannin McBee to address what they saw as a “gap” in the cloud market. Venturo, a hobbyist Ethereum miner, bought GPUs cheaply from insolvent cryptocurrency mines, opting for Nvidia hardware to add memory (so Nvidia may have invested in CoreWeave).

Initially, CoreWeave focused exclusively on cryptocurrency applications. But it has shifted over the past few years to general-purpose computing and generative AI techniques, such as text-generating AI models.

Fast forward to today, and CoreWeave offers access to a dozen SKUs of Nvidia GPUs in the cloud, including H100s, A100s, A40s, and RTX A6000s for artificial intelligence and machine learning, visual effects and rendering, batch processing and pixel streaming, and more Example.

“Our clients include generative AI companies like Tarteel AI, the creator of NovelAI, and Anlatan, and we’ve backed a range of open source AI and machine learning projects like EleutherAI and Stability AI’s Stable Diffusion,” Intrator told TechCrunch in an email interview . “We also cooperate with many famous VFX and Animation studios such as Spire Animation, and work closely with ‘metaverse’ companies such as 3D Streaming and PureWeb. “

It will be difficult for any cloud provider to compete with the established players in the space — namely Google, Amazon and Microsoft. For perspective, AWS had $80.1 billion in revenue last year, while Google Cloud and Azure had $75.3 billion and $26.28 billion, respectively.

Obviously, those numbers are multiples of CoreWeave’s valuation, not to mention its war chest.

To drive this home, according to Statista Report From the fourth quarter of 2022, AWS has a market share of 32%, Azure 23%, and Google Cloud 10%.

That’s not to say that smaller players can’t succeed. There are success stories like Paperspace, Scaleway, and DigitalOcean (albeit with ups and downs), and new entrants like Clever Cloud and Vultr.

CoreWeave also seems to be evidence of this. Even after a tough quarter for the cloud infrastructure market, the startup managed to secure funding. As my colleague Ron Miller has written, companies are finding ways to cut spending in an uncertain economy, slowing market growth to 21% — a sharp jump from 36% the year before. decline.

“We have more than 1,000 customers across four key verticals — machine learning and artificial intelligence, batch processing, pixel streaming, and visual effects and rendering,” Intrator said.

CoreWeave demonstrates that the dominant cloud providers—Google Cloud, Azure, and AWS—have failed to meet the need for generative AI, especially with their “legacy cloud infrastructure.” To be sure, they were bickering, especially when AWS launched a service dedicated to text generation models. But in Intrator’s view, incumbents aren’t meeting the GPU needs of the thousands of new AI companies — at least not at CoreWeave’s (ostensibly lower) price.

CoreWeave claims its hardware for inferencing — that is, serving AI models — is industry-leading and capable of “autoscaling” in under three seconds.It’s also touting its newer instance offerings, which include Nvidia’s HGX H100 server platform.

“For some time now, technology decision makers have faced the increasingly complex and costly task of deploying the highly specialized computing tasks that support modern AI and machine learning applications to more general purpose cloud computing providers,” said Intrator. “CoreWeave Recognizing this need will require deep investment in the scalable and achievable capabilities of the next generation of innovative AI companies.”

Beyond infrastructure, CoreWeave is trying to differentiate itself with offerings like its accelerator program, which launched in late October. (Intrator says it has more than 30 members.) The accelerator — which operates on an open basis with no deadlines — offers companies computing credits in addition to discounts on the CoreWeave cloud and other hardware resources.

The new section will lead to more such efforts, Intrator said.

“With the advent of CoreWeave and this new investment, it can provide more companies with more customized solutions that can outperform traditional cloud providers,” he added. “While large language models and deep learning image generation techniques have been around for some time, their prominence in the public eye is fueling a fierce scramble to secure processing power for more powerful applications. CoreWeave recognizes this need Deep investment in the scalable and achievable capabilities of the next generation of innovative AI companies will be required.”

It will also be used to expand the CoreWeave team. The company now employs “just over” 115 people — a 150 percent increase over the past 12 months — thanks in part to its January acquisition of cloud rendering platform Conductor Technologies, and Intrator says it plans to keep hiring “throughout the year.” “

The question, of course, is whether CoreWeave can maintain its impressive momentum—especially if the generative AI bubble bursts anytime soon. For what it’s worth, Friedman and Gross seem convinced of the strategy. They emailed this statement:

AI is the new electricity, and CoreWeave is building the grid for the new economy. We’ve had the pleasure of working for Apple and Microsoft; having invested in groundbreaking companies like Stripe, Figma, and Airtable; so we can confidently say that CoreWeave is growing at an unprecedented pace. Every day is a sprint to victory, reflected in the quality and quantity of customers. The demand for AI inference is about to explode, and CoreWeave has spent years preparing the infrastructure and culture for this moment of expansion.

There are some reasons for optimism. according to According to a recent ESG survey, 59% of companies plan to increase spending on public cloud applications in 2023, while 56% expect their spending on public cloud infrastructure services to increase.