October 31, 2023: This Quick Take might scare you
Dealing with the AI Chip drought, a trick or treat special just for you, the re-sale revolution, building a tactical startup program and more
Quick Take: Seizing opportunities amidst the AI chip shortage
image courtesy of ideogram.ai
Today’s article covers the recent CentML news and it’s significance to us as technologists.
Let’s dive in.
A Noteworthy Funding Round
Toronto-based startup, CentML, recently raised an impressive $27 million USD in what's being referred to as an "extended seed" round.
This round saw participation from a diverse range of investors, including Gradient Ventures, TR Ventures, Deloitte Ventures, Nvidia, Radical, and a few angel investors.
What makes this funding round particularly interesting is the term "extended seed". This round is an extension of the original seed round from last year, which has now increased the total amount raised from $3.5 million to a whopping $30.5 million. This extension included both equity and SAFE investments, possibly at different valuations.
The Unusual Participant: Nvidia
One of the participants in this round, Nvidia, is a notable mention. CentML's technology could potentially reduce the demand for AI chips, making Nvidia's participation intriguing. Other participants, such as Gradient, Deloitte Ventures, and TR Ventures, are corporate venture capital arms of Google and Thomson Reuters.
Why the Large Seed Round?
CentML is a company that's perfectly positioned to raise funds during the current AI hype cycle. The founding team comprises professors and PhD students from the globally renowned UofT computer science department, known for its cutting-edge AI research.
CentML's technology aims to improve the performance of machine learning models, reducing the need for AI computing and AI chips. This is a perfect solution for a market currently facing a shortage of AI chips due to supply issues.
The company's competitors, such as MosaicMl, have either been sold for substantial amounts ($1.3 billion USD) or have already raised massive funding rounds ($85 million USD for OctoML). This positions CentML as an attractive risk for investors.
The Potential Market Capture
The AI chip market, valued at $53 billion USD, is facing significant supply issues. If CentML can deliver on its promises, it could capture a large portion of this market. The company claims that its optimization technology can save companies 80% of the required computing power. Given the team's pedigree, there's a strong belief that they can build this product. If successful, this could represent a multi-billion dollar opportunity.
The Risks Involved
However, there are risks involved. There's a timing risk, as every chip cycle goes through boom and bust periods. Changes in the demand and supply dynamics for AI chips could potentially dampen the desire for optimization software.
There's also a perception risk. Some developers may be skeptical about the possibility of optimizing models without encountering performance issues.
Key Takeaway for Tech Founders
The AI hype cycle is far from over. Companies like CentML are leveraging this hype and the current market conditions to their advantage. As tech founders, it's crucial to stay informed about these trends and understand how they could potentially impact your own ventures.
The next episode drops this week
A Trick or Treat Special
In honor of spooky season, we’ve launched a limited ticket bundle for our upcoming TechTO: Premium. 🎃
Buy two tickets for our upcoming event for only $60! (reg GA per ticket is $40)
TechTO: Premium on November 6 promises to close out the year with a bang! It features conversations with Amar Varma, Matthew Tsang, Manmeet Maggu and more of the best VCs, Founders, and Startup Entrepreneurs in the business.
It’s an exceptional event experience, with the same networking, communication, and after-party you love. It’s TechTO x10!
Reads & Opportunities
This Montreal-based health tech startup just raised $4m
Your guide to great outbound automation
How to build a tactical startup program
The re-sale revolution: Aligning Incentives for Brands & Consumers with an End-to-End Platform
Charli AI is hiring Engineers in Vancouver
Do you like our new format?
Want to showcase your company, events, and opportunities to 60,000+ subscribers across the Canadian Tech Eco-system? Reach out to [email protected] to learn more