AI startup Modular raises $250 million, seeks to challenge Nvidia dominance
FILE PHOTO: Figurines with computers and smartphones are seen in front of the words "Artificial Intelligence AI" in this illustration taken, February 19, 2024. REUTERS/Dado Ruvic/Illustration/File Photo
AI startup Modular said on Wednesday it raised $250 million in a funding round valuing it at $1.6 billion, as it aims to challenge Nvidia's software stranglehold on the AI computing market.
The funding, which nearly tripled the company's valuation from two years ago, was led by U.S. Innovative Technology fund. DFJ Growth and all existing investors, including GV, General Catalyst and Greylock also joined the round.
Founded in 2022 by veteran engineers at Apple and Google, Modular's platform is designed to allow developers to run their AI applications across a variety of computer chips without having to rewrite code for each one. It now serves cloud providers such as Oracle and Amazon, as well as chipmakers Nvidia and AMD.
Nvidia controls over 80 per cent of the high-end AI chip market, partly thanks to its proprietary CUDA software, which locks over 4 million global developers into its ecosystem.
Modular says it has adopted what it calls a "Switzerland" strategy to be a neutral software layer.
Chris Lattner, co-founder and CEO of Modular, said the goal is not to defeat the market leader. "What we're focused on is not like pushing down Nvidia or crushing them. It's more about enabling a level playing field so that other people can compete," he said.
It plans to sell the software directly to enterprises on a consumption basis and through revenue-sharing partnerships with cloud providers.
The company's strategy has attracted investors betting on a multi-vendor future for AI hardware. Sam Fort, partner at DFJ Growth, compared Modular to "VMware for the AI era", which supported companies to work across CPUs.
"Modular is trying to create the AI hypervisor that will allow you to port workloads across different vendors," Fort said.
The company, with about 130 employees, plans to use the new capital to expand its engineering and go-to-market team. The funds will also help the company expand from its current focus on AI inference into the AI training market.
