AI Chip Startup Etched Is in Talks for $20 Billion Valuation
Startup is also raising capital at $10 billion valuation in separate round led by Sequoia
- Etched, an AI chip startup, is set to quadruple its valuation to about $20 billion in a new funding round led by the firm Jane Street.
- The company is also raising capital at a $10 billion valuation in a separate round led by Sequoia Capital.
- Etched is testing its initial chip design and working to validate its first product to fulfill $1 billion in demand from customers, according to the firm’s website.
Etched, a startup developing AI chips in competition with Nvidia NVDA -2.21%decrease; down pointing triangle, is set to quadruple its valuation to about $20 billion in a new funding round led by an existing investor, the firm Jane Street, according to people familiar with the matter.
Benefiting from a frenzied market for venture-capital investments in artificial-intelligence startups, the San Jose, Calif.-based company is also raising capital at a $10 billion valuation in a separate round led by Sequoia Capital, the people said. The financings haven’t closed, and the terms of the deals could still change.
Such back-to-back financings have become more commonplace in Silicon Valley in the midst of the AI boom. Startups are frequently selling stakes at one valuation and then quickly raising more capital at far higher prices—a reflection of the bargaining power companies have over investors scrambling to invest in the leading AI players.
Etched has said it is building a chip for running AI models, also known as inference. According to the firm’s website, it is testing its initial chip design and working to validate its first product to fulfill $1 billion in demand from customers.
While Nvidia is the leading vendor of AI chips, a wave of startups is trying to challenge its dominance, buoyed by the success of Cerebras Systems and Groq. Many of the new startups are developing chips tailored for inference, including the U.K. startup Fractile and SambaNova. Nvidia’s dominance is rooted in the capability of its graphics processing units, or GPUs, at training AI models.
Etched was founded in 2022 by Gavin Uberti, Chris Zhu and Robert Wachen, who are Harvard dropouts. Earlier investors in the company include the investment firm Stripes, Peter Thiel, Ribbit Capital and Primary Venture Partners.