Business Blog: Foundry's a Go

Exclusive: Foundry comes out of stealth with a $350 million valuation

March 21, 2024

Jared Quincy Davis was inspired by AlphaGo. You know, the AI program that plays Go, the 2,500-year old Chinese strategy game?

"Part of the reason I started working in deep learning was I saw AlphaGo from DeepMind and I thought that technique, if extended to real world problems, can be pretty transformative," Davis told me over a Zoom call. "But there are some limitations in that initial approach that made it not quite viable for problems at scale. So, I actively started working on filing those gaps."

The result, ultimately, is the company Davis started building in 2022: Foundry, a cloud computing service provider focused on AI workloads. The company today launched out of stealth, having raised $80 million in total seed and Series A funding, Fortune has exclusively learned. The round was co-led by Lightspeed Venture Partners and Sequoia Capital, and other investors include Microsoft Ventures and Jeff Dean, Chief Scientist at Google DeepMind and Google Research.

Foundry is now valued at $350 million. And the company says it has more than eight figures in revenue, and its customers include LG, KKR, Stanford, MIT, and Carnegie Mellon University.

There's a lot here, right? Foundry's valuation has seemingly jumped substantially from where it reportedly was last year, at $50 million. As the AI boom booms, it feels like every conversation I have these days comes back to valuations in the space. On this point, folks seem to fall into two camps, Lightspeed partner Raviraj Jain told me.

"Either you fall into the camp of thinking this is the biggest shift of a lifetime, or you think about this from a more classical lens," he said.

I confess to Jain, to Davis, and I suppose now to you, that I personally don't feel fantastically comfortable with where AI valuations are at. Most seem ultimately really frothy to me. So, I ask both of them to make the case to me, as to why Foundry specifically is so geared to succeed.

"We're on the fast track for this technology [AI] to be pretty ubiquitous…But it's very compute-intensive to train these models and therefore we're at a point where there's a true bottleneck," Jain tells me, adding that these compute services that Foundry is set up to provide aren't exclusively the province of hyperscalers like AWS, making room for companies like Foundry.

Ultimately, Jain sees Foundry as one of those much-discussed "picks and shovels" businesses, because everyone is going to need compute, and the market will expand as compute capabilities are increasingly democratized.

"It is the biggest technological shift of our lifetimes—and a lot of the stacking order of that is going to be in the early winners," he said. "And if you can be in the 'picks and shovels business' for a market that massive, the next Googles will be made in the next few years."

To Davis, the compute concerns that Foundry is solving for are the "rare mix of technically rich and compelling, and near-term, economically viable.”

So, I don't know, but what I can tell you is this: The demo was fast, Foundry does seem pretty picks and shovels-esque, and having covered large cloud providers like AWS, I don't think they're beyond disruption. Then there's Davis himself, who seems ready for a roller coaster. He's a first-time founder, and this was his first time speaking on-the-record about Foundry—but I walked away feeling like I had a clear sense of how Davis thinks.

“I have a deterministic and optimistic perspective on the world, which is: I don’t think things will kind of just evolve their own way," he told me. "I think that we can actually shape how things evolve.”

And so, Davis was inspired by AlphaGo. Now, the main objective of the game Go is, more or less, to capture territory. Though Davis is playing some pretty tough opponents, I'd say the game is on.

It's Reddit time…In just a few hours, Reddit will make its trading debut on the New York Stock Exchange. After Astera Labs' 72% pop on Wednesday, all eyes are on Reddit as investors look for evidence that the IPO market is back.

See you tomorrow,

Allie Garfinkle
Twitter: @agarfinks
Email: alexandra.garfinkle@fortune.com
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Joe Abrams curated the deals section of today’s newsletter.

VENTURE DEALS

- Pocket FM, a Los Angeles, Calif.-based audio entertainment platform and developer of audio series, raised $103 million in Series D funding. Lightspeed led the round and was joined by Stepstone Group.

- Borderless AI, a Toronto, Canada-based developer of an AI HR agent, raised $27 million in seed funding. Susquehanna and Aglaé Ventures led the round and were joined by others.

- NX Technologies, a Cologne, Germany-based developer of the bezahl.de platform for automotive payment management, raised €22 million ($23.8 million) in Series B funding. PayPal Ventures led the round and were joined by Seaya Ventures, Walter Ventures, and existing investor Motive Ventures.

- Morph, a Singapore-based developer of an ethereum layer 2 network, raised $19 million in seed funding. DragonFly Capital led the round and was joined by Pantera Capital, Foresight Ventures, The Spartan Group, MEXC Ventures, Symbolic Capital, and others.

- Fuel Me, a Burr Ridge, Ill.-based fuel procurement and management platform, raised $18 million in Series A funding. Pritzker Group Venture Capital and Tribeca Venture Partners led the round and were joined by Bessemer Venture Partners, Interplay Venture Capital, FJ Labs, and others.

- BlueFlag Security, a Sunnyvale, Calif.-based security platform for software development lifecycles, raised $11.5 million in seed funding. Maverick Ventures and Ten Eleven Ventures led the round and were joined by Pier 88 Investment Partners.

- Mermaid Chart, a San Francisco-based platform designed for employees to build and collaborate on text-based diagrams, raised $7.5 million in seed funding from M12, Sequoia Capital, Open Core Ventures, Streamlined Ventures, Good Friends Capital, V1 VC, and others.

- Buzz Solutions, a Palo Alto, Calif.-based provider of AI technology designed for visual infrastructure inspections and predictive maintenance, raised $5 million in funding. GoPoint Ventures led the round and was joined by Blackhorn Ventures and MaC Venture Capital.

- Basketball Forever, a New York City-based basketball media brand, raised $4 million in Series A funding. Yolo Investments led the round and was joined by Astralis Capital Management, Andover Ventures, and others.

- Monaire, a Boston, Mass.-based platform that uses AI to predict maintenance needs and provide energy management to HVAC and refrigeration systems in small buildings, raised $3.5 million in seed funding. Construct Capital led the round and was joined by Workshop Ventures and others.

- Tensorplex Labs, a Singapore-based developer of decentralized AI and crypto ecosystems, raised $3 million in seed funding. Canonical Crypto and Collab+Currency led the round and were joined by Digital Currency Group, Accomplice, GoldenChain, and others.

- Stanhope AI, a London, U.K.-based developer of AI models designed to make decisions without previous training by providing them with neuroscience data, raised £2.3 million ($2.9 million) in seed funding. The UCL Technology Fund led the round and was joined by Creator Fund, MMC Ventures, Moonfire Ventures, Rockmount Capital, and angel investors.

- PuppyGraph, a Santa Clara-based growth analytics engine designed to turn multiple data stores into one graph, raised $2.5 million in seed funding from Eastlink Capital and others.

- Flowpay, a Prague, Czech Republic-based AI-powered platform designed to help small-to-medium sized businesses secure funding, raised €2.1 million ($2.3 million) in seed funding from Techstars, Soulmates Ventures, DEPO Ventures, and angel investors.

- Umoja, an Atlanta, Ga.-based smart money protocol, raised $2 million in a seed extension from Coinbase, 500 Global, Quantstamp, and others.

The New Race for AI

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PRIVATE EQUITY

- Exponent agreed to acquire a majority stake in Ethos Engineering, a Dublin, Ireland-based provider of mechanical and electrical designs for sustainable buildings. Financial terms were not disclosed.

OTHER

- nCino (NASDAQ: NCNO) agreed to acquire DocFox, a Miami, Fla.-based provider of automated onboarding and account opening processes for commercial and business banking, for $75 million.

IPOS

- Astera Labs, a Santa Clara, Calif.-based developer of semiconductor-based solutions for cloud and AI infrastructure, raised $713 million in an offering of 19.8 million shares priced at $36 on the Nasdaq. The company posted $116 million in revenue for the year ending December 31, 2023.

FUNDS + FUNDS OF FUNDS

- Zero Prime Ventures, a San Francisco-based venture capital firm, raised $48 million for its second fund focused on early-stage data infrastructure, generative AI tooling, and machine learning companies.

PEOPLE

- Performance Equity Management, a Greenwich, Conn.-based private equity investment firm, hired Andy Canovali as a principal. Formerly, he was with Goldman Sachs Asset Management.

- Red Cell Partners, a Washington, D.C.-based accelerator, hired Veronica B. Daigle as partner and national security president practice. Formerly, Daigle served as Assistant Secretary of Defense for Readiness.

- Zero Prime Ventures, a San Francisco-based venture capital firm, hired Yang Tran as a partner. Formerly, he was with Speedinvest.