Graphcore founders Simon Knowles and Nigel Toon
Graphcore
LONDON – UK-based chipmaker Graphcore announced on Tuesday that it has raised $ 222 million in investment as it seeks to acquire 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 shipped tens of thousands of chips to customers, including Microsoft and Dell.
The Series E funding round, which comes less than a year after Graphcore raised a $ 150 million extension for the latest round, values 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 the point where we are not really looking for venture investors into the company. We are more interested in companies that would be long-term investors and holders. the shares in the public markets, if we ever reach that point. ”
Toon said at the time that going public is ‘ideally what we would like to do’, but he emphasized ‘there is still a lot of water to flow under the bridge before we get there’.
Total investment in Graphcore is now $ 710 million and the four-year-old company has $ 440 million in cash on hand.
The latest round of funding was led by the Ontario Teachers’ Pension Plan Board, while other new investors included private equity investor Baillie Gifford, venture capital investor Draper Esprit, and funds managed by Fidelity International and Schroders.
On Tuesday, Toon said in a statement, “The support of such respected institutional investors says something very powerful about how the markets now view Graphcore. The confidence they have in us stems from the competence we have demonstrated in building our products and our company. “
He added, “We have developed a technology that far outperforms legacy processors such as GPUs, a powerful set of software tools tailored to the needs of AI developers, and a global sales operation that brings our products to market.”
Entrepreneurs with a serial chip
Graphcore was founded in June 2016 in Bristol, England, by Toon and Simon Knowles, who sold their previous chip company, Icera, to Nvidia for $ 435 million in 2011. The pair formed the original idea for Graphcore in a small pub called the Marlborough Tavern. in Bath in January 2012.
Today, the company employs approximately 450 people in Bristol, Cambridge, London, Beijing, Oslo, Palo Alto, Seattle and Hsinchu in Taiwan. It expects the number to grow to 600 by the end of 2021.
But the rapid growth has not come cheap. It posted a pre-tax loss of $ 95.9 million on revenues of $ 10.1 million in 2019, according to an annual report filed with the UK Business Register.
Santa Clara heavyweights Intel and Nvidia are two of the obvious front runners in the AI chip market, given their expertise in chip making. The companies have not disclosed how many of their AI-optimized chips have been sold. However, according to market data website Statistica, more than a trillion computer chips are expected to ship by 2020. In 2019, Intel’s share of the total chip market was 15.7% and it has been the market leader every year since 2008, except for 2017, when Samsung took the number one spot.
Graphcore’s Toon criticized Nvidia’s plan to buy British chip designer Arm from SoftBank for $ 40 billion, saying it is bad for the competition.
“We believe Nvidia’s proposed acquisition of Arm is anti-competitive,” he said. “It risks closing or limiting other companies’ access to advanced CPU processor designs that are so important in the technology world, from data centers to mobile devices, automobiles and embedded devices of all kinds.”
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 Sequoia in Silicon Valley, which has also backed Nvidia.
Last month, Sequoia partner Matt Miller told CNBC: Graphcore “is in this position where people are always coming to them trying to give them more money. So they don’t need funding. They’re well funded for years to come,” but they definitely have people trying to invest in the business. “
He added, “I don’t think you should beat Nvidia because the market is so huge. Hiring Nvidia is like this huge task. It’s a huge company with billions of revenues and incredible teams doing all kinds of amazing things. I think. that Graphcore has the potential to become a very strong player in the AI microprocessor market. It continues to make great strides with many of the cloud providers, and many people want to be diversified. They don’t all want one chip. “
Graphcore launched its second-generation IPU earlier this year, despite disruption from the coronavirus pandemic.