Cisco and Pure Storage bet on CoreWeave in $650 million secondary sale

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Cisco and Pure Storage bet on CoreWeave in $650 million secondary sale

Cisco and Pure Storage bet on CoreWeave in $650 million secondary sale

CoreWeave CEO Michael Intrator appears on CNBC on July 17, 2024.

CNBC

CoreWeave, a startup that rents out Nvidia’s artificial intelligence chips to other companies, said Wednesday that it closed a $650 million secondary share sale, with Cisco and Pure Storage investing alongside financial institutions.

In the transaction, CoreWeave’s existing stakeholders are selling shares to outside investors. Bloomberg reported last month that CoreWeave was targeting a $23 billion valuation for the deal, up from $19 billion in a $1.1 billion investment round announced in May.

CoreWeave is going head-to-head with large cloud infrastructure providers, such as Amazon and Google in providing Nvidia’s graphics processing units, or GPUs, to companies for AI workloads. The startup got a big boost last year, when Nvidia made an investment, and another stamp of approval after Microsoft enlisted the company as a third-party cloud provider.

Investors have been eager to sink money into companies that are enabling generative AI, which can create text, images and videos in response to a few words of human input. The frenzy began after Microsoft-backed OpenAI’s ChatGPT went viral in late 2022 and led to soaring demand for compute power.

“We are a company that is one of the few companies in the world that’s able to bring on this kind of infrastructure at the scale that’s required to actually make a difference,” CoreWeave co-founder and CEO Mike Intrator told CNBC’s “Squawk Box” in July.

The following month Nvidia said its H200 GPUs had become available through CoreWeave, meaning the startup was the first cloud provider to reach general availability with the graphics cards.

CoreWeave has raised $14 billion, a spokesperson said. In May, the company said it had raised $7.5 billion in fresh debt. In October, it announced a $650 million credit line.

Last week, bitcoin mining company Core Scientific said CoreWeave had signed up for 500 megawatts worth of data center capacity in a deal that could be worth up to $8.7 billion over 12 years.

In addition to Cisco and Pure, investment firms including BlackRock, Coatue and Fidelity participated in CoreWeave’s secondary sale.

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