Lambda Labs announced Thursday it successfully closed a $320 million Series C funding bringing its valuation to $1.5 billion.
The San Jose-based startup is a GPU cloud company that specializes in hardware and computing services used in the training of artificial intelligence (AI) software.
The Series C round was led by Thomas Tull’s US Innovative Technology (USIT) with previous investors Crescent Cove, Mercato Partners, 1517 Fund, Bloomberg Beta, and Gradient Ventures. B Capital and SK Telecom were new investors.
Lambda, founded in 2012 by brothers Stephen and Michael Balaban, both computer engineers, championed the use of Nvidia GPUs early on and the company plans to use the investment to purchase more compute power, to build a larger GPU cloud.
"AI is fundamentally restructuring science, commerce, and industry. Over the next 10 years, every human endeavor will be augmented by the integration of (large language models) LLMs and generative AI," Lambda CEO Stephen Balaban said in a statement. "This AI rollout is going to require a lot of GPUs. This latest financing supports our mission to make GPU compute as ubiquitous as electricity."
The company's original focus was facial recognition software, but the brothers' interests in both AI and infrastructure found them moving into machine learning consulting and the launch of the AI-powered Dreamscope app which allowed users to alter and filter images.
However, originally hosted on Amazon Web Services, in 2016 the brothers realized not only could build their own data center, but also offer their services to companies moving into AI.
"We had developed expertise in infrastructure and in AI, and there was no company focusing just on this at the time, and those companies that were selling AI servers had their machines pushed by salespeople, not by AI experts," Michael Balaban told The Next Platform in a 2020 interview. "So, when we started selling our servers online – interestingly enough on Amazon’s online store – we realized this was just a better business than that AI application we had developed."
Lambda now has more than 5,000 customers globally in manufacturing, health care, pharmaceuticals, and financial services. Lambda counts Microsoft, Kaiser-Permanente, as well as the U.S. Depatment of Defense as clients. The investment comes as more and more companies invest in AI.
"Investing in strong infrastructure to power and disseminate cutting-edge technology is imperative to ensure the U.S. remains a global leader in AI advancement," USIT Chairman Thomas Tull said in a statement. "A long-time pioneer in deep-learning, Lambda offers an unmatched combination of hardware and cloud infrastructure alongside connective software and tools that enable AI developers to build with efficiency and speed."
While Lambda and Nvidia have a strong relationship — last April Lambda was chosen as NVIDIA Partner Network (NPN) Solution Integration Partner of the Year in the Americas for the third year — discussions that the Santa Clara-based AI juggernaut would take an equity stake in Lambda failed to produce an agreement.
