Etched Could Receive a $40 Billion Valuation
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It was only last August that US chip startup Etched raised $700 million at a valuation of $21 billion. Now that valuation could double again, TechCrunch reports. According to people familiar with the company, the young firm is already being flooded with investment offers valuing it at twice that amount or more.
Etched Needs a Lot of Capital
Etched is currently reviewing incoming offers ranging from $40 billion from top-tier investors to $50 billion from lesser-known backers, according to one source. These fundraising discussions are still at an early stage, meaning the terms of any potential deal could still change. Etched itself declined to comment.
The startup requires significant capital because it is pursuing a particularly costly segment of the AI industry: building complete AI hardware systems that use its own proprietary chips. The person familiar with these offers said that if Etched were to raise an amount comparable to its last round, it could have a financial runway of up to 3.5 years.
Startup Attractive to VCs
There are reasons why venture capitalists are eager to acquire stakes in Etched. The four-year-old startup promises to challenge Nvidia. Quantitative trading firm Jane Street not only led the last $700 million funding round but is also a customer that has taken delivery of an early system. Etched announced in July that it had already secured $1 billion in customer orders.
The young company claims its chips can process more tokens faster and more cost-effectively than Nvidia’s. That is why the processors are so attractive to Jane Street. Even a tiny speed advantage is said to be capable of generating massive gains for the customer.
What also impresses investors: Etched has managed to poach a significant amount of talent from Nvidia. According to the Wall Street Journal, around 15% of the startup’s 400 employees previously worked at the chip giant. Etched also operates a new 10-megawatt data center in Silicon Valley and has established an office in Taiwan to coordinate production close to TSMC.
