Crusoe Energy, a start-up specializing in data centers, is in the process of raising up to $500 million in equity capital. The funding round, led by Peter Thiel’s Founders Fund, aims to expand Crusoe’s facilities that provide essential infrastructure for the growing artificial intelligence (AI) sector. This fundraising effort will value Crusoe at approximately $3 billion, more than twice its value from two years prior, according to sources familiar with the deal. This increase reflects the company’s rising fortunes amidst significant AI spending catalyzed by the release of ChatGPT in late 2022.
Founders Fund, a consistent investor in Crusoe since its seed round in 2019 and an early supporter of OpenAI, is set to lead the current funding round, as reported by those close to the negotiations. Felicis Ventures, another existing investor in Crusoe, is also expected to participate.
Crusoe is part of a rapidly expanding cohort of start-ups in the emerging “neocloud” industry. These companies provide outsourced cloud computing services to tech groups working on AI development. The industry has seen substantial financial investment from Silicon Valley and Wall Street, directed towards acquiring thousands of Nvidia’s AI chips, known as graphics processing units (GPUs). These chips are installed in data centers and rented out to technology companies like Microsoft and Meta. CoreWeave, notable as the largest neocloud company, has raised over $12 billion in debt and equity through multiple deals over the past 18 months.
Crusoe’s investment round coincides with a $3.4 billion agreement signed with Blue Owl Capital, an asset management firm, to fund a new data center in Texas. This facility will be leased to Oracle, which has arrangements to supply computing power to Microsoft and OpenAI.
Venture capital firms are actively investing in AI technology, recognized by many as impactful as the internet or mobile technology. More than 40% of the $93 billion spent by venture capitalists in the first half of this year targeted AI start-ups, according to data from PitchBook, a private markets data company.
The intense interest in backing advanced AI models like OpenAI, Elon Musk’s xAI, and Anthropic has rapidly increased their valuations, with OpenAI valued at $150 billion earlier this month. Many venture funds are now focusing on investing in AI infrastructure or applications, hoping to secure more favorable deals.
Crusoe was established by Chase Lochmiller, a former quantitative trader, and Cully Cavness, an energy investment banker, in 2018. The company initially developed data center modules utilizing waste gases from oilfields to power energy-intensive computing operations like bitcoin mining and AI. Around 2020, Crusoe began focusing on creating permanent data center facilities, amassing significant quantities of AI chips from Nvidia and leasing its cloud computing technology to AI model developers.
Last year, Crusoe secured $200 million in debt from the New York investment firm Upper90, using its chips as collateral. This funding was used to purchase additional Nvidia H100 GPUs. Crusoe, Founders Fund, and Felicis Ventures have declined to comment on the proceedings.