Simon Knowles and Nigel Toon, founders of Graphcore
Graphcore
LONDON – UK chip maker Graphcore announced on Tuesday that it has raised $ 222 million in investments to face American 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 designed specifically to power artificial intelligence software. The company has sold tens of thousands of its chips to customers, including Microsoft and Dell.
The Series E financing round, which comes less than a year after Graphcore raised a $ 150 million extension for its last round, values the company at $ 2.77 billion, up from $ 1.5 billion in 2018.
Nigel Toon, CEO and co-founder of Graphcore, told CNBC in July: “We are now at a point where we are not really looking for venture investors in the business. We are more interested in companies that would be investors and long-term holders of the stock. , perhaps, in public markets, if we get to that point. “
At the time, Toon said that going public is “ideally what we would like to do”, but he emphasized that “a lot of water still has to flow under the bridge before we get to that point.”
The total investment in Graphcore is now $ 710 million and the four-year company has $ 440 million in cash.
The latest round of financing was led by the Ontario Teachers’ Pension Plan Board, while other new investors included private equity investor Baillie Gifford, venture capitalist Draper Esprit, as well as funds managed by Fidelity International and Schroders.
On Tuesday, Toon said in a statement: “Having the support of such respected institutional investors says something very powerful about how markets now view Graphcore. The confidence they have in us comes from the competence we demonstrate in building our products and our business. “
He added: “We have created technology that dramatically outperforms legacy processors, such as GPUs, a powerful set of software tools that are tailored to the needs of AI developers and a global sales operation that is bringing 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 company, Icera, to Nvidia for $ 435 million in 2011. The pair formed the initial idea for Graphcore in a small pub called Marlborough Tavern in Bath in January 2012.
Today, the company employs around 450 people in Bristol, Cambridge, London, Beijing, Oslo, Palo Alto, Seattle and Hsinchu in Taiwan. The number is expected to grow to 600 by the end of 2021.
But rapid growth did not come cheap. It had a pre-tax loss of $ 95.9 million on revenues of $ 10.1 million in 2019, according to an annual report presented at the UK’s Companies Registry.
The Santa Clara heavyweights, Intel and Nvidia, are two of the main competitors in the AI chip market due to their experience in chip 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 sold in 2020, according to the 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 chip designer Arm from SoftBank for $ 40 billion, saying it is bad for competition.
“We believe that the proposed acquisition of Arm by Nvidia is anti-competitive,” he said. “You risk closing or limiting other companies’ access to cutting-edge CPU processor designs, which are so important across the technology world, from data centers to mobile devices, cars and embedded devices of all kinds.”
Google, Amazon and Apple are also working on their own AI chips.
Sequoia supports Nvidia and Graphcore
Past investors in Graphcore include companies like Microsoft and BMW iVentures, as well as venture companies like London’s Atomico and Silicon Valley Sequoia, which also supported Nvidia.
Last month, Matt Miller, Sequoia’s partner, told CNBC: Graphcore “is in this position where there are always people who try to give them more money. So they don’t need financing. They are well funded for the next few years, but they definitely have people trying to invest in the company. “
He added: “I don’t think you have to face Nvidia because the market is so big. Facing Nvidia is a huge task. It’s a huge company with billions of revenue and incredible teams doing all kinds of wonderful things. I think what Graphcore has the opportunity to be 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 diverse, they don’t want to be everything with a chip. “
Graphcore launched its second generation of IPUs earlier this year, despite the interruption of the coronavirus pandemic.