Nvidia-backed AI startup CoreWeave gets $650 million funding boost from top Wall Street banks

In May 2023, we reported on CoreWeave after the Nvidia-backed AI startup raised $200 million in funding amid the ongoing AI boom. However, as the demand for AI grows, so does the need for GPUs powering AI data centers. Over the past 18 months, CoreWeave has secured $12.7 billion in funding from both equity and debt investors, but the company still requires additional resources to expand its operations.

On Friday, CoreWeave announced it has secured a $650 million credit line to support its expansion and grow its data center portfolio. CoreWeave did not disclose the interest rate on its credit facility or the specific timeline for repayment. In the last year and a half, the GPU-focused cloud computing provider has raised $12.7 billion, which includes a $1.1 billion round in May that valued the company at $19 billion.

Founded in 2017 by Mike Intrator, Brian Venturo, and Brannin McBee, CoreWeave was created to fill what they identified as a gap in the cloud market. The startup specializes in providing cloud services powered by GPUs, the type of chip Nvidia pioneered, which is now crucial for AI technologies like OpenAI’s ChatGPT.

Originally serving the cryptocurrency mining sector, CoreWeave has shifted its focus to artificial intelligence and has experienced rapid growth as AI adoption continues to rise. The AI boom, sparked by the success of ChatGPT, has led many startups to raise over $12 billion in the first quarter of 2023 alone.

CoreWeave offers cloud computing power to AI companies, positioning itself as a competitor to giants like Microsoft Azure and Amazon Web Services (AWS). By the end of 2024, the company plans to operate 28 data centers across the U.S. and internationally, including locations in Austin, Chicago, Las Vegas, and London, with another 10 data centers planned for 2025. CoreWeave has already supplied GPUs to companies such as Microsoft and French AI startup Mistral, CNBC reported.

Looking ahead, CoreWeave has lined up $2 billion in contracted revenue for 2024, a testament to its growing presence in the AI infrastructure space. AI models require vast amounts of computing power, largely relying on specialized Nvidia chips. Most leading tech companies in AI are investing heavily in these chips, which cost from hundreds of thousands to billions of dollars. Nvidia, in addition to developing these chips, has invested in emerging AI startups like CoreWeave to ensure widespread adoption of its technology.

Goldman Sachs, JPMorgan Chase, and Morgan Stanley led CoreWeave’s latest $650 million credit facility, with additional participation from Barclays, Citi, Deutsche Bank, Jefferies, Mizuho, MUFG, and Wells Fargo. This new financing will help CoreWeave accelerate its growth and take advantage of opportunities in the rapidly expanding AI sector.

In a press release, CoreWeave’s co-founder and CEO Mike Intrator said, “This credit facility provides additional liquidity to accelerate our growth strategy and capitalize on new opportunities in the rapidly evolving AI space.”

In recent months, banks are increasingly looking to capitalize on the AI boom, positioning themselves for future IPOs in the sector. The generative AI market is expected to surpass $1 trillion in revenue by 2032, according to estimates. Just last week, OpenAI secured an impressive $6.6 billion in funding, a move that could push its valuation to $157 billion, solidifying its status as one of the most valuable private companies globally.

The maker of ChatGPT also secured a $4 billion revolving line of credit, bringing its total liquidity to over $10 billion. OpenAI’s financing was backed by many of the same banks that supported CoreWeave, with an option to increase the credit line by an additional $2 billion.