Lightning AI founder and CEO William Falcon began leasing AI chips from data center provider Voltage Park last March to help its customers train and refine their AI models. Less than a year later, his Nvidia-backed startup merges with AI Factory, which manages more than 35,000 Nvidia GPUs.
Falcon said the combined company, which will be called Lightning AI, was valued at more than $2.5 billion and had more than $500 million in annual recurring revenue, including GPU rentals booked through Voltage Park.
Lightning had grown from creating a popular open source tool, PyTorch Lightning, which helps researchers manage machine learning, to bundling software to help companies like German chip company Infineon and advertising agency Monks manage the creation and tuning of large language models.
Falcon had been running Lightning AI on cloud giant AWS, but last year it began exploring a new class of startups such as CoreWeave, Nebius and Voltage Park, known as “neoclouds,” that had emerged to meet growing demand for graphics processing units, while planning to launch a marketplace that would combine rented AI chips with its AI training software.
“We got together and proposed a bold idea: merge and build a full-stack AI cloud,” says Falcon, after discovering that many of the neoclouds were better suited to working with startups with little talent, willing to make concessions to get access to cheap chips.
Falcon founded Lightning in 2019 after completing a PhD in deep learning at New York University and interning with Yann LeCun at Facebook. Its open source tool has received more than 400 million downloads and the company has raised more than $100 million from investors such as Coatue, Index Ventures and Bain Capital.
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Their new partner was born out of a $900 million grant from crypto billionaire Jed McCaleb, co-founder of blockchain startup Ripple and bitcoin exchange platform Mt. Gox. McCaleb’s nonprofit, Navigation Fund, purchased 24,000 then-high-end Nvidia H100 chips and created Voltage Park to manage them with the goal of reducing the cost of computing for startups, Reuters reported.
Voltage Park CEO Ozan Kaya told Forbes that the investment had made the company the third largest neocloud, behind CoreWeave and Nebius, in terms of chips deployed. The San Francisco-based company currently operates six data centers in four US states. “We were looking at different ways to improve our infrastructure and Lightning was the strongest for us,” Kaya said.
Voltage Park’s unusual financing was an attraction, rather than a hindrance, for Falcon. Most of its cloud rivals (and tech giants like Meta) have taken on debt to finance the purchase of new data centers and AI chips. CoreWeave alone has raised more than $14 billion from lenders. Voltage Park had accumulated 60 megawatts of active data center capacity, with McCaleb’s foundation as a majority shareholder.
“It was the only new cloud without debt,” Falcon said. “I think the first failure will be the debt, its leverage.
While OpenAI, Meta and xAI have been signing deals for data centers with gigawatts of power, Voltage Park customers like Cursor, open source AI lab Reflection and AI video generator Higgsfield typically only needed clusters of AI chips with tens of megawatts of power, Kaya said.
McCaleb’s foundation, formed in November 2023, will now have a significant stake in the new merged company, it stated a Forbes David Coman-Hidy, Chairman of the Navigation Fund. Coman-Hidy added that McCaleb occasionally advised Voltage Park, but was not on the board of directors or had an ownership stake in Voltage Park or Lightning AI. The fund has grown its donor base and assets to $1.25 billion and has committed to making grants to support causes that address climate change, farm animal welfare, criminal justice reform and open science, he said.
This article was originally published by Forbes US
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