Neoclouds are supposed to be under pressure, with the likes of Gartner Inc. and Elon Musk both predicting a bloodbath in the nascent cloud infrastructure segment in the not-too-distant future, but apparently nobody told General Compute Inc.
The cloud infrastructure startup said today it has just raised $100 million in a Series A round of funding led by Blackbird and Abstract Ventures, with participation from Fuse Venture Partners, Village Global and other investors, bringing its post-money valuation to $800 million.
The round may have raised some eyebrows because General Compute’s rivals in the neocloud industry are enduring a torrid time at the moment. That’s best illustrated by the biggest neocloud of all, CoreWeave Inc., whose stock recently fell to a 12-month low amid incessant talk that investors are getting weary of funding what seems like an endless, multibillion-dollar artificial intelligence infrastructure build out.
Musk echoed those fears last weekend when he posted on X that his space rocket-come-AI company Space Exploration Technologies Corp. had managed to secure $40 billion in new debt. However, he warned that he was only able to get the money because his company has alternative revenue streams. “200+ neoclouds are going to see guppy-level death and consolidation,” Musk said. “Some will make it through, but not many.”
Musk’s comments came a couple of weeks after the respected analyst firm Gartner Inc. said that up to 80% of all neoclouds could disappear by the end of the decade. Some smaller neoclouds are already feeling the pressure. Earlier this month, Microsoft Corp. cancelled a multibillion-dollar deal with a startup called Nscale Global Holdings Ltd., in a move that now calls into question that company’s plans for an initial public offering.
Despite all of the negative headlines, General Compute co-founder and Chief Executive Finn Puklowski told TechCrunch in an interview that he’s not worried about what anyone else is doing. He said Musk’s comments are likely an effort to drive down the prices of the graphics processing units he wants to buy, saying that fears of a chip industry collapse are “massively overstated,” based on the demand his company is seeing.
General Compute also has a different business model compared to most neoclouds. Rather than focusing on general purpose GPUs, it specifically only buys inference chips from other chipmakers such as Cerebras Systems Inc, SambaNova Systems Inc. and Positron AI Inc. Its customers never have to manage the hardware either. They simply set up a workload and hit the start button, and General Compute routes it to the most suitable chip. Customers can choose between dedicated bare metal servers or a guaranteed tokens-per-second service level agreement.
Moreover, General Compute isn’t interested in building data centers of its own, Puklowski said. Instead, it rents space in facilities that belong to other companies, who take care of all of the networking, power delivery, cooling and maintenance work. The startup also has money to play with. In addition to today’s funding round, it secured $400 million in debt financing in July, and most of that has not yet been spent.
Puklowski said the company has been running some workloads for customers, but its first large-scale chip deployments won’t go live until the first quarter of next year. It has more than 75 megawatts of capacity planned for next year, and has already struck one large deal that will bring in over $100 million in annual recurring revenue.
Blackbird’s James Palmer said silicon is no longer the major bottleneck in the AI industry. Rather, what companies need is power. “Both power and silicon supply chains are slow to scale,” he added. “Finding creative ways through those constraints will decide who wins. Finn and his team are the ultimate coalition builders, and they think in decades, not days.”
The startup has also been praised by the three chipmakers who supply it with inference chips. “It understands that inference performance depends on how the full system is deployed and operated,” said Cerebras Chief Technology Officer Sean Lie. “We value their approach and commitment to fast execution at scale.”
Image: General Compute
A message from John Furrier, co-founder of SiliconANGLE:
Support our mission to keep content open and free by engaging with theCUBE community. Join theCUBE’s Alumni Trust Network, where technology leaders connect, share intelligence and create opportunities.
- 15M+ viewers of theCUBE videos, powering conversations across AI, cloud, cybersecurity and more
- 11.4k+ theCUBE alumni — Connect with more than 11,400 tech and business leaders shaping the future through a unique trusted-based network
Are you an AWS customer? Support SiliconANGLE financially by buying your AWS services from ourMarketplace portal page and links:https://siliconangle.com/aws-marketplace/
About SiliconANGLE Media
SiliconANGLE Media is a recognized leader in digital media innovation, uniting breakthrough technology, strategic insights and real-time audience engagement. As the parent company of SiliconANGLE, theCUBE Network, theCUBE Research, CUBE365, theCUBE AI and theCUBE SuperStudios — with flagship locations in Silicon Valley and the New York Stock Exchange — SiliconANGLE Media operates at the intersection of media, technology and AI.
Founded by tech visionaries John Furrier and Dave Vellante, SiliconANGLE Media has built a dynamic ecosystem of industry-leading digital media brands that reach 15+ million elite tech professionals. Our new proprietary theCUBE AI Video Cloud is breaking ground in audience interaction, leveraging theCUBEai.com neural network to help technology companies make data-driven decisions and stay at the forefront of industry conversations.
