Groq AI, a fast-growing startup struggling 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, California-based company — which is not affiliated with the “Grok” chatbot developed by billionaire Elon Musk’s xAI startup — is aiming to raise $300 million in a Series D round of preferred stock, at a post-money valuation of $2.5 billion, according to a document obtained by The Post.
BlackRock is the lead investor in the round. Social Capital, the firm led by billionaire and All In podcast co-host Chamath Palihapitiya, is also expected to participate, as are Tiger Global and D1 Capital.
Groq has hired Morgan Stanley to assist with its fundraising. The fundraising is expected to close in early July. Terms have not yet been finalized and are subject to change.
“We are not commenting on the financing at this time,” a Groq spokesperson said. A BlackRock spokesperson also declined to comment.
Insider was first to report BlackRock’s involvement and the expected valuation after the deal. The Information previously reported in May that Groq had hired Morgan Stanley to help.
Representatives for the other companies did not immediately respond to requests for comment.
Groq was founded in 2016 by former Google hardware chief 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 specifically designed to power generative AI products, such as OpenAI’s ChatGPT. The company claims its chips are both faster and cheaper than traditional hardware.
In March, Ross told Axios that Groq plans to deploy about 1.5 million chips by the end of this year.
The startup still has a long way to go to compete with Nvidia, which last month briefly became the world’s most valuable company with a market capitalization of more than $3 trillion.
Before the next round, Groq had already raised approximately $367 million from outside investors. In 2021, the company closed a $300 million funding round at a valuation of $1.1 billion.
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 to back Groq.
Palihapitiya reportedly said the executives were fired after an internal investigation into an unspecified “situation.”
Several media outlets reported that Palihapitiya fired the executives for creating a special vehicle to invest in Groq – apparently without his knowledge.
Zaveri, who was on Groq’s board at the time, dismissed that explanation as a “pretext” in a statement to Axios last March and said that some Social Capital executives had “approved and participated in the investment.”
Last November, Groq founder and CEO Jonathan Ross criticized Musk for choosing such a similar name for xAI’s chatbot in a light-hearted blog post titled “Hey Elon, It’s Time to Cease and Un-Groq.”
Elon Musk said the chatbot was inspired by the 1979 novel “The Hitchhiker’s Guide to the Galaxy.”
“If you’ve heard Elon’s announcement, you may recall that he’s pitching his new creation as a robot with a touch of wit and sarcasm,” Ross wrote. “He’s chosen to call this chatbot a name that is phonetically identical to our company name and brand.”
