Graphcore raises $ 222 million to tackle Nvidia with AI chips

Graphcore founders Simon Knowles and Nigel Toon


LONDON – British chipmaker Graphcore announced on Tuesday that it has raised $ 222 million in investments because it wants to take on US rivals Nvidia and Intel.

Graphcore said it will use the funding to support its global expansion and to accelerate the development of its intelligence processing units (IPUs), which are specifically designed to power artificial intelligence software. The company has already sent tens of thousands of its chips to customers, including Microsoft and Dell.

The series of E-financing rounds, which take place less than a year after Graphcore raised a $ 150 million extension to its final round, value the company at $ 2.77 billion, up from $ 1.5 billion in 2018.

Graphcore CEO and co-founder Nigel Toon told CNBC in July: “We are now at a point where we are not really looking for venture capitalists in the business. We are more interested in companies that would be long-term investors and holders. perhaps from the share in the public markets, if we ever reach that point. ‘

At the time, Toon said the public ‘is ideally what we would like to do’, but he stressed that there is still a lot of water to flow under the bridge before we get to the point. ‘

The total investment in Graphcore now amounts to $ 710 million and the four-year-old company has $ 440 million in cash on hand.

The final round of financing was led by the Ontario Teachers’ Pension Plan Board, while other new investors include private equity investor Baillie Gifford, venture capitalist Draper Esprit, as well as funds managed by Fidelity International and Schroders.

Toon said in a statement on Tuesday: “The support of such respected institutional investors says something very powerful about how the markets see Grafcore now. The confidence they have in us comes from the ability we have shown to our products and our to build a business. “

He added: “We have created a technology that performs dramatically better than processors such as GPUs, a powerful set of software tools tailored to the needs of AI developers, and a global sales industry that brings our products to market. . “

Serial chip entrepreneurs

Graphcore was founded in June 2016 in Bristol, England, by Toon and Simon Knowles, who sold their previous chip business, Icera, to Nvidia in 2011 for $ 435 million. The pair form the first idea for Graphcore in a small bar called the Marlborough Tavern. 10 weather forecast for Bath.

The company currently has about 450 people in Bristol, Cambridge, London, Beijing, Oslo, Palo Alto, Seattle and Hsinchu in Taiwan. The number is expected to grow to 600 by 2021.

But the rapid growth is not cheap. It generated a pre-tax loss of $ 95.9 million on revenue of $ 10.1 million in 2019, according to an annual report submitted to the UK Business Register Company House.

Santa Clara heavyweights Intel and Nvidia are two of the obvious forerunners in the AI ​​disk market, given their expertise in disk making. The companies did not disclose how many of their AI-optimized chips were sold. However, more than a trillion computer chips are expected to be shipped in 2020, according to market data website Statistica. In 2019, Intel’s share of the overall chip market was 15.7% and has been the market leader every year since 2008, with the exception of 2017 when Samsung took first place.

Graphcore’s Toon criticized Nvidia’s plan to buy British disk designer Arm from SoftBank for $ 40 billion, saying it was bad for competition.

“We believe Nvidia’s prospective acquisition of Arm is competitive,” he said. “It runs the risk of blocking or restricting other companies’ access to leading CPU processors, which are so important across the technology world, from data centers, mobile devices, cars and built-in devices of every kind.

Google, Amazon and Apple are also working on their own AI chips.

Sequoia supports Nvidia and Graphcore

Previous investors in Graphcore include Microsoft and BMW iVentures, as well as venture companies such as London’s Atomico and Silicon Valley’s Sequoia, which also supported Nvidia.

Last month, Sequoia partner Matt Miller told CNBC: “Graphcore” is in this position where they’re always trying to get people to give more money. So they do not need funding. They’ll be well funded for the next few years, definitely has people trying to invest in the company. ‘

He added: “I do not think you need to take on Nvidia because the market is so big. It’s a big task to tackle Nvidia. It’s a big company with billions in revenue and incredible teams doing all sorts of amazing things. I think that what Grafcore has the opportunity to do is a very strong player in the AI ​​microprocessor market.It continues to make great progress with many of the cloud providers, and many people want to be diversified.They do not want to be all with one slide. ‘

Graphcore launched its second-generation IPU earlier this year despite disruption of the coronavirus pandemic.