On August 3rd, CoreWeave, a specialized cloud provider, successfully raised $2.3 billion through a debt facility led by Magnetar Capital and Blackstone. The debt was collateralized by Nvidia chips, particularly the sought-after Nvidia H100 chip used in AI computing. This unconventional use of AI hardware as collateral underscores its value in the capital-intensive AI industry.
In addition to Magnetar Capital and Blackstone, other lenders in the facility included Coatue, DigitalBridge, BlackRock, PIMCO, and Carlyle. This substantial loan reflects the growing market for private asset-based financing, as private equity firms turn to more secure lending options backed by hard assets amid a slowdown in bank lending.
CoreWeave, which is backed by Nvidia, has benefited from the boom in generative AI and operates purpose-built cloud infrastructure on a large scale. It has collaborations with AI startups and cloud providers while competing with them to build clusters that power AI workloads.
Having unique access to advanced Nvidia chips that are in short supply, CoreWeave enjoys a competitive advantage over traditional cloud providers like Microsoft, Amazon, and Google, which face supply constraints while developing their own chips.
The $2.3 billion raised through the debt facility will be used to acquire more graphics processing units, invest in data centers, and expand hiring efforts. The company recently announced a $1.6 billion data center in Texas and aims to have 14 data centers in the U.S. by the end of the year.
Prior to this debt facility, CoreWeave had already raised $421 million in equity earlier in the year, led by Magnetar Capital, and achieved a valuation of over $2 billion.
