Nvidia Lambda Labs partner seeks $800 million as demand for AI computing skyrockets
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Lambda Labs, a cloud computing startup that rents servers using Nvidia’s artificial intelligence chips, is in talks to raise another $800 million as it seeks to capitalize on the bull market around AI and the scarcity of state-of-the-art graphics processing units.
The proposed deal would put the company among the best-funded startups in Silicon Valley in recent years, at a time when demand for the computing infrastructure behind the AI boom is skyrocketing.
Funding will be added to $320 million The San Jose-based company raised a $1.5 billion round in February. Lambda also announced in April that it had secured a $500 million loan using Nvidia chips as collateral, which it will use to fund the expansion of its cloud services.
Lambda’s rapid funding streak highlights the growing demand for Nvidia’s GPUs, which are becoming sought-after commodities by Big Tech companies and startups like OpenAI, Anthropic, and Elon Musk’s xAI scrap for so-called “compute” power.
Term sheets are expected to be announced in mid-July, and JPMorgan is helping coordinate the fundraising for Lambda, which has yet to disclose a revised valuation. The capital will be used to buy more Nvidia GPUs and related cloud networking software, as well as hire more staff, according to three people familiar with the process.
Lambda declined to comment.
Led by co-founder Stephen Balaban, Lambda has benefited from close relationship with Nvidia, which has risen to challenge Microsoft and Apple to become the world’s most valuable company, trying to reach a $3 trillion market capitalization.
CEO Jensen Huang has been shifting his GPUs to rivals like Lambda and CoreWeave as he seeks to diversify Nvidia’s customer base and create new rivals to cloud giants Google, Amazon, and Microsoft. Those Big Tech companies are not just Huang’s customers, they’re also competitors developing their own AI-specific chips.
CoreWeave meanwhile reached a valuation of 19 billion USDand last month reached two deals to raise $7.5 billion in debt and $1.1 billion in equity.
It is unclear whether Lambda will take on new investors in the new funding round. In February, billionaire Thomas Tull’s US Innovative Technology, B Capital, SK Telecom and investment giant T Rowe Price were the main backers of Lambda.
Lambda raised $44 million in March 2023 with the support of Quora founder and OpenAI board member Adam D’Angelo, along with OpenAI president Greg Brockman and Y Combinator CEO Garry Tan.
The California company initially focused on facial recognition before turning to AI, then pivoted to cloud computing after realizing that its servers would be more valuable if rented to others.
