Groq AI, a buzzy startup fighting to compete with AI chip supplier Nvidia, is set to raise hundreds of millions of dollars in a new funding round, The Post has learned.
The Mountain View, Calif.-based firm – which is not affiliated with the “Grok” chatbot developed by billionaire Elon Musk’s startup xAI – is aiming to raise $300 million in the Series D preferred stock round at a post-money valuation of $2.5 billion, according to a document obtained by The Post.
BlackRock is serving as the lead investor for the round. Social Capital, the firm led by high-profile billionaire and “All In” podcast co-host Chamath Palihapitiya, is also set to participate, as is Tiger Global and D1 Capital.
Groq hired Morgan Stanley to assist the fundraising effort. The round is expected to be finalized in early July. Terms have yet to be finalized and are subject to change.
“We are not commenting on funding at this time,” a Groq spokesperson said. A BlackRock spokesperson also declined to comment.
Insider was first to report on BlackRock’s involvement and the expected post-money valuation. The Information previously reported in May that Groq had hired Morgan Stanley to assist.
Representatives for the other firms did not immediately return requests for comment.
Groq was founded in 2016 by ex-Google hardware executive Jonathan Ross, who worked on the team that developed the Big Tech giant’s in-house machine learning chips known as tensor processing units, or TPUs.
Groq makes chips and software that are specifically designed to power generative AI products, such as OpenAI’s ChatGPT. The firm claims that its chips are both faster and cheaper than traditional hardware.
In March, Ross told Axios that Groq expected to deploy some 1.5 million chips by the end of this year.
The startup has a long way to go to compete with the likes of Nvidia, which briefly became the world’s most valuable company last month with a market cap of more than $3 trillion.
Prior to the upcoming round, Groq had raised about $367 million from outside investors to date. In 2021, the firm closed a $300 million funding round at a $1.1 billion valuation.
Groq was at the center of a bizarre incident earlier this year in which Social Capital abruptly fired two of its partners, Jay Zaveri and Ravi Tanuku, without explanation. Social Capital was one of the first’s earliest backers.
Palihapitiya reportedly said that the executives had been fired after an internal investigation into an unspecified “situation.”
Multiple outlets reported that Palihapitiya had fired the executives for setting up a special purpose vehicle to invest in Groq – apparently without his knowledge.
Zaveri, who sat on Groq’s board at the time, dismissed that explanation as a “pretext” in a statement to Axios last March and said some of Social Capital’s leadership had “approved and participated in the investment.”
Last November, Groq founder and CEO Jonathan Ross jabbed Musk for picking such a similar name for xAI’s chatbot in a lighthearted blog post titled “Hey Elon, it’s time to cease & de-grok.”
Musk has said the chatbot was inspired by the 1979 novel “Hitchhiker’s Guide to the Galaxy.”
“If you heard Elon’s announcement, you may recall that he is touting his new creation as a bot with a bit of wit and sarcasm,” Ross wrote. “He chose to call this chatbot a name which is phonetically identical to our company’s name and trademark.”
