Groq raises $350 million at a $3.5 billion valuation after Nvidia deal

Groq has finalized a $350 million funding round valuing the AI chip startup turned data center operator at $3.5 billion, which equals almost half of the $6.9 billion the startup was worth only last September before Nvidia licensed its technology and hired away its founder. 

Groq fall began from Nvidia poach

Groq started in 2016, building its own hardware to take on Nvidia in AI processing. This changed after Nvidia struck a licensing deal for the AI company’s technology and poached CEO Jonathan Ross along with other senior staff.

A deal of this type, alongside the subsequent change in staff has become prevalent in the AI industry. Google and Meta have done similar, licensing technology and bringing in engineers from AI startups instead of acquiring the companies. Large tech firms do this to secure great expertise without buying the business entirely.

The Nvidia deal stripped out leadership at Groq, leaving a company dedicated to rebuilding its staff and purpose over the last months.

$350 million round led by Disruptive

The round was led by Disruptive, a Dallas investment firm, according to Bloomberg. A Groq representative also said that Nvidia was investing money into the deal.

Disruptive was founded by Alex Davis, who also serves as Groq’s executive chairman.

The new valuation hits at about half of where the AI startup sat at its peak value. This September peak was stated to be $6.9 billion, pointing at a sharp reset for a company that was, until recently, one of the bigger names in the race to build silicon chips that could compete with Nvidia’s.

From selling chips hardware to renting compute

Groq has now restructured itself as a data center operator, chasing demand for the computing power that runs AI models in production, an area known as inference. The company raised $650 million in June to fund this shift, and reset its valuation at the time without attributing any specific numbers.

“Inference will without a doubt become the largest and most critical layer of AI infrastructure,” Davis said in a statement to Bloomberg News, adding that the startup would concentrate on “supporting the most important model makers.”

Some of the fresh capital from the round has been set aside for the startup’s physical expansion. Groq plans to grow its total data center capacity to more than 200 megawatts by next year.

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