① CoreWeave just completed a round of financing in early May. The valuation soared from 7 billion US dollars to 19 billion US dollars after only 5 months; ② As we all know, CoreWeave's core competitiveness is to be able to obtain Nvidia's video cards on a priority basis; ③ In the previous round of debt financing, the company also used Nvidia's H100 video cards as collateral.
Finance Association, May 17 (Editor Shi Zhengcheng) According to the latest news on Friday, after completing equity financing of 1.1 billion US dollars just two weeks ago, the American AI cloud computing startup CoreWeave immediately followed up with a round of debt financing of up to 7.5 billion US dollars, naturally to buy a video card.
(Source: prnewswire)
According to the announcement, in addition to Magnetar, which has participated in the VC round, global asset management institutions such as Blackstone and Carlyle are also participating in this financing. A company spokesperson declined to respond to questions about “whether Nvidia video cards were used as collateral for this financing again.”
Core competency: Good relationship with Nvidia
As a background, CoreWeave began as a cryptocurrency “mining” company and later switched to cloud computing platform services. Since these two things are essentially going to be done, there is a high degree of similarity — buying Nvidia video cards in bulk. Since CoreWeave still takes care of Nvidia's business when the coin market is bad, the relationship between the two was established many years ago.
With the explosion of AI driving demand for computing power, CoreWeave has also become a favorite in the capital market. During the company's multiple financing periods over the past year, international giants such as Blackstone, PIMCO, BlackRock, Carlyle, Fidelity, and J.P. Morgan appeared collectively, and Nvidia also became a shareholder (one) of the company.
From the perspective of the capital market, one of CoreWeave's core competencies is “a good relationship with Nvidia” and can obtain a large number of H100 video cards when there is a serious shortage of video cards. What surprised the market even more that “you can still play like this” is that in a $2.3 billion round of financing last summer, the company's collateral turned out to be an H100 video card.
As an interlude, Microsoft, suffering from not being able to buy a video card to provide computing power to OpenAI, also signed a major contract with CoreWeave last year to buy computing power.
Double! Double!
For Nvidia, the core value of supporting CoreWeave is to break the pattern of the cloud computing market. Similar to Nvidia, which has a market capitalization of $2 trillion, the three major US cloud computing companies (Amazon AWS, Microsoft Azure, and Google Cloud) are all supergiants. Therefore, supporting a “family member” in the market has become a profitable strategy.
Wall Street also saw CoreWeave's potential to become another cloud computing giant. In the financing round in December last year, the company was valued at only 7 billion US dollars. After only 5 months, the company announced another Series C round of financing worth 1.1 billion US dollars on May 1. It is reported that the valuation has soared to 19 billion US dollars. An increase of 12 billion US dollars (about 86.6 billion yuan) in just 5 months. Only a few racetracks such as AI can achieve this year.
(Source: prnewswire)
The sharp rise in valuation also corresponds to the rapid expansion of CoreWeave's scale. In the past year alone, CoreWeave's data centers have expanded from 3 to 14, and the number of employees has quadrupled to over 550.
The company expects the number of its data centers to double to 28 this year. On Friday, CoreWeave announced that it will leave the US and invest £1 billion in the UK. It plans to open two first data centers during the year and expand further in 2025.
Company founder: Subsequent companies will also need to seek financing
Regarding the $7.5 billion debt financing that has just been finalized, CoreWeave CEO Michael Intrator said that most of the newly borrowed money will be used to expand the data center, including purchasing artificial intelligence chips and related infrastructure such as servers and network equipment. He expects $7.5 billion to be disbursed within this year, after which the company will seek new financing again.
Regarding Nvidia's (last year) investment, Intrator said it reflected the company's ability to execute plans and rapidly configure hardware for end customers. Another co-founder of the company, Brannin McBee, also said that CoreWeave is already at the same level as the industry's “supergiants” in AI computing. “I don't think anyone would have expected another hyperscale cloud service provider to enter the market so quickly.”