CoreWeave debt deal with investment firms raises $7.5B for AI datacenter startup

AI server startup CoreWeave has raised $7.5 billion in a debt deal from private equity companies Blackstone, BlackRock, and others.

The extra billions CoreWeave now has at its disposal will be used to further the hyperscaler startup's business model, which is renting out AI computing resources to other companies like Microsoft and Open AI. As of November, the AI datacenter company had 22,000 H100 GPUs at its disposal, though that number has likely gone up since then.

We can certainly expect that number to rise further as a direct result of CoreWeave's latest cash injection, which will also be used to purchase the servers that AI GPUs go in, as well as networking equipment. This will likely help CoreWeave achieve its goal of operating 28 datacenters by the end of the year, twice the amount it operates currently.

Two of these datacenters will be located in the UK, the first international expansion for the New Jersey-based firm. The UK datacenters are valued at £1 billion ($1.3 billion).

According to Crunchbase, CoreWeave has raised $4.6 billion in investments, including $1.1 billion funding received earlier this month and a previous deal that granted the company $2.4 billion.

Given that CoreWeave's debt now amounts to $9.9 billion and the company was most recently valued at $19 billion, it seems unlikely that CoreWeave would be able to obtain this loan without securing it with collateral. With its last debt deal, the AI firm used its own GPUs as collateral, although CoreWeave has declined to comment to The Register on whether it's using GPUs as collateral again.

Obviously, using GPUs as collateral is very risky business, because it's the single most important component in CoreWeave's servers. Should the AI datacenter operator fail to make its debt payments, it would probably lose its GPUs, and that would probably make it impossible for CoreWeave to operate.

Still, lots of capital is likely necessary for the AI datacenter startup to achieve its goals. The only other companies that have achieved hyperscaler status include giants like Google, Amazon, and Microsoft, all of which already had the money needed to fund their datacenter ventures.

Though potentially risky, CoreWeave's latest loan could help it grow even further, and if renting AI computing is profitable, then paying off debts might not be so hard, as long as CoreWeave has enough time. ®