CoreWeave closes $650 million secondary sale as AI startups lure investors

By Krystal Hu

(Reuters) - AI cloud startup CoreWeave said on Wednesday it has closed a $650 million minority investment led by Jane Street, Magnetar, Fidelity Management and Macquarie Capital, as investors look to capitalize on the generative AI boom.

The secondary sale, which involves existing shareholders selling their holding to new investors, valued the company at $23 billion, according to a source familiar with the matter.

CoreWeave in May was valued at $19 billion after a $1.1 billion series C investment led by private equity firm Coatue, a source had said at the time.

Demand for cloud computing services such as those provided by specialized firms like CoreWeave has sky-rocketed since the launch of OpenAI's ChatGPT in late 2022 as businesses rush to develop their own generative AI applications.

CoreWeave provides services powered by pricey and supply-constrained AI chips, such as those sold by backer and AI bellwether Nvidia (NASDAQ:NVDA ).

The company competes against cloud computing service providers such as tech giant Microsoft (NASDAQ:MSFT )'s Azure and Amazon (NASDAQ:AMZN )'s AWS.

The round included additional participation from Cisco (NASDAQ:CSCO ) Investments, Pure Storage (NYSE:PSTG ), BlackRock (NYSE:BLK ), Coatue, Neuberger Berman and others, the company said.

CoreWeave engaged Morgan Stanley (NYSE:MS ) and Goldman Sachs in connection with this transaction.

Funding of AI and cloud companies in the U.S., Europe and Israel is rising after three years of decline and is estimated to hit $79.2 billion by the end of the year, venture capital firm Accel said in October.

OpenAI closed a $6.6 billion funding round in October at a $157 billion valuation.

Source: Investing.com