Nvidia has struck a $6 billion deal with Poolside to license the AI startup’s technology for building large-scale language models. In addition, Nvidia has also provided employment opportunities for the startup’s 109 employees and committed to investing $1 billion in Poolside’s remaining business, which has a market value of $12 billion. The goal of Nvidia’s project is to create an open artificial intelligence model that can compete with its Chinese counterparts.
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Poolside outlined the terms of the deal with Nvidia in a letter to investors. Notably, Nvidia’s license is non-exclusive, and Poolside’s three founders will retain their positions at the company. The letter also pointed out that the transaction ‘Not an acquisition’ and does not apply to transactions undertaken to supplement the workforce of talented engineers. Poolside plans to distribute the funds from Nvidia to investors by the end of next year.
Nvidia has already closed two deals using the program. The IT giant purchased licenses that allowed the use of the technology, hired employees, but the company was not completely absorbed and continued to exist. In all three cases, the graphics accelerator maker received non-exclusive licenses, and none of the three companies was acquired outright.
In May of this year, the media wrote that Nvidia paid Groq US$20 billion for the opportunity to use its AI technology and also hired top engineers. Meanwhile, Groq remains independent and has attracted $650 million in investment. This month, the company completed $350 million in financing, valuing it at $3.5 billion. Under the same plan, the company signed a $900 million deal with startup Enfabrica, sources said. This approach allows large tech companies to gain access to valuable talent and advanced technology without acquiring the company outright. It also avoids scrutiny from industry regulators that would arise in the event of a full acquisition.
Nvidia took away key engineers as part of the Groq deal, and the company has since changed leadership. In Poolside’s case, the startup’s three founders will stay and 109 employees will transfer to Nvidia. Previously, a Poolside executive said that there were fewer than 70 people responsible for creating the company’s AI models, and the total number of employees was less than 115.
As for the software Nvidia will be able to use under the license, we’re talking about the Model Factory system, which Poolside uses to create neural networks. It is worth noting that this startup initially developed AI agents for generating code, later entered the data center field, and later released an open AI model based on Nvidia accelerators. Because Nvidia has obtained a non-exclusive license, Poolside will be able to provide access to Model Factory to other developers.
“Over the past three and a half years, we have been moving in the right direction amid competition with rapidly growing capital requirements. Late last year, we had a six-week window to raise $2 billion to pay for a 40,000 GB300 accelerator cluster that was scheduled to go live in January. We didn’t get it done in time, and the cluster left us.”Chi Said said in the letter. It also said the company could use a cluster of 10-20,000 accelerators to create a model that can compete with advanced solutions.
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