William Falcon built a popular open source tool PyTorch Lightning used by AI researcher. Now, he’s merged his startup with data center operator Voltage Park to create an “AI cloud” with a $2.5 billion valuation.
© 2024 Bloomberg Finance LP
Lightning AI founder and CEO William Falcon began renting AI chips from data center provider Voltage Park last March to help his clients train and finetune AI models. Less than a year later, his Nvidia-backed startup is merging with the AI factory, which manages over 35,000 Nvidia GPUs.
Falcon said that the merged company, to be called Lightning AI, was valued at over $2.5 billion and that it had over $500 million of annual recurring revenue, which includes GPU rentals booked through Voltage Park.
Lightning had grown from building a popular open source tool PyTorch Lightning, which helps researchers manage machine learning, to bundling software to help corporates like German chip company Infineon and advertising agency Monks manage building and tweaking large language models.
Falcon had run Lightning AI on cloud giant AWS but last year started to shop around a new class of startups like CoreWeave, Nebius and Voltage Park, which are known as “neoclouds” that had sprung up to meet surging demand for graphic processing units, as he planned to launch a marketplace that would bundle rented AI chips with his AI training software.
“We met and proposed a bold idea to merge together and build a full stack AI cloud,” says Falcon, after he found that many of the neoclouds were better suited to working with scrappy startups, willing to make compromises to get access to cheap chips.
Falcon founded Lightning in 2019 after studying for a doctorate on deep learning at NYU and interning with Yann LeCun at Facebook. Its open source tool has been downloaded more than 400 million times and the company has raised over $100 million from investors like Coatue, Index Ventures, and Bain Capital.
Its new partner was born from a $900 million grant from crypto billionaire Jed McCaleb, who cofounded blockchain startup Ripple and early bitcoin exchange Mt. Gox. McCaleb’s not-for-profit, the Navigation Fund, bought 24,000 of Nvidia’s then top-of-the-line H100 chips and set up Voltage Park to manage them with the goal of lowering the cost of compute for startups, per Reuters reporting.
Voltage Park CEO Ozan Kaya told Forbes that the investment had made the company the third largest neocloud, behind CoreWeave and Nebius, based on chips deployed. The San Francisco-based company now operates six data centers in four states across the United States. “We were evaluating different ways to move up the stack and Lightning was the strongest one for us,” Kaya said.
Voltage Park’s unusual funding was a draw rather than a deterrent for Falcon. Most of its neoclouds rivals (and tech giants like Meta) have loaded up on debt to fund purchases of new datacenters and AI chips. CoreWeave alone has raised over $14 billion from lenders. Voltage Park had built up 60 megawatts of active data center capacity with McCaleb’s foundation as its majority shareholder.
“It was the only neocloud without debt,” Falcon said. “I think the first failure mode is going to be debt, their leverage.
While OpenAI, Meta and xAI have been signing deals for data centers with gigawatts of power, Voltage Park’s customers like Cursor, open source AI lab Reflection and AI video generator Higgsfield, typically only needed clusters of AI chips with tens of megawatts of power, said Kaya.
McCaleb’s foundation, which was formed in November 2023, will now hold a “significant equity stake” in the new merged company, David Coman-Hidy, president of the Navigation Fund told Forbes. Coman-Hidy added that McCaleb occasionally advised Voltage Park but was not on the board, and had no ownership stake in Voltage Park, or Lightning AI. The fund now has grown its donor base and assets to $1.25 billion and has promised to make grants supporting causes that address climate change, the welfare of farm animals, criminal justice reform and “open science,” he said.