Groq AI, a buzzy startup competing with AI chip supplier Nvidia, is set to raise hundreds of millions of dollars in a new funding round, The Washington Post has learned.
The Mountain View, California-based company, which is not affiliated with Grok, a chatbot developed by billionaire Elon Musk’s startup xAI, is seeking to raise $300 million in a Series D preferred stock round at a post-money valuation of $2.5 billion, according to documents obtained by The Washington Post.
BlackRock is the lead investor in the round, which will also include participation from Social Capital, led by well-known billionaire and “All In” podcast co-host Chamath Palihapitiya, Tiger Global and D1 Capital.
Groq has hired Morgan Stanley to assist with the fundraising effort. The round is expected to close in early July. Terms have not yet been finalized and are subject to change.
“We do not comment on fundraising matters at this time,” a Grok spokesman said. A BlackRock spokesman also declined to comment.
Insider first reported Regarding BlackRock’s involvement and expected post-money valuation. Previously reported information In May, Grok announced it had hired Morgan Stanley to back it.
Representatives for the other companies did not immediately respond to requests for comment.
Groq was founded in 2016 by former Google hardware executive Jonathan Ross, who worked on the team developing the tech giant’s in-house machine learning chip, the Tensor Processing Unit (TPU).
Groq makes chips and software designed specifically to power generative AI products such as OpenAI’s ChatGPT, and the company claims its chips are faster and cheaper than traditional hardware.
March, Ross told Axios. Groq plans to deploy about 1.5 million chips by the end of the year.
The startup still has a long way to go before it can compete with the likes of Nvidia, whose market capitalization topped $3 trillion last month, briefly making it the world’s most valuable company.
Groq had previously raised approximately $367 million from outside investors ahead of its next round. In 2021, the company closed a $300 million funding round at a valuation of $1.1 billion.
Groq was at the center of a bizarre incident earlier this year when Social Capital, one of Groq’s early backers, suddenly fired partners Jay Zaveri and Ravi Tanuku without explanation.
Palihapitiya reportedly said the executives were fired following an internal investigation into unspecified “circumstances.”
Multiple media outlets reported that Palihapitiya had fired executives for setting up a special purpose vehicle to invest in Grok, but he apparently was unaware of this.
In a statement to Axios last March, Zaveri, who was on Grok’s board at the time, dismissed that explanation as a “pretext” and said some Social Capital executives “approved and participated in the investment.”
Last November, Groq founder and CEO Jonathan Ross criticized Musk for choosing a similar name for his xAI chatbot. A light-hearted blog post titled, “Hey Elon. It’s time to stop and quit grokking.”
Musk said the chatbot was inspired by the 1979 novel “The Hitchhiker’s Guide to the Galaxy.”
“Those of you who heard Elon’s announcement may recall that he was promoting this new creation as a bot with a touch of wit and sarcasm,” Ross wrote. “He decided to give the chatbot a name that is phonetically identical to our company name and trademark.”
