Seattle software startup OctoAI, specializing in tools for building and running generative AI models efficiently, has been acquired by Nvidia, a major chip maker. The acquisition was for approximately $165 million, with the potential for the total amount paid by Nvidia to exceed $250 million, depending on incentives for retaining key members of the OctoAI team. This acquisition is the latest in a series of AI-related acquisitions by Nvidia, which has been benefiting from the AI boom due to the high demand for its GPUs in training and running AI models.
OctoAI had raised over $132 million since its inception in 2019, when it spun out of the University of Washington. The company’s founders were involved in creating Apache TVM, an open-source deep learning compiler stack that originated as a research project at the university’s computer science school. The startup was previously known as OctoML but changed its name to OctoAI earlier this year to reflect an evolution in its offerings. Its flagship product, OctoStack, was released in May and is described as the industry’s first complete tech stack for serving generative AI models.
Nvidia’s acquisition of OctoAI was structured as a traditional M&A deal, as opposed to a reverse acquihire, a trend that has faced regulatory scrutiny in recent years. With more AI startups relying on funding and facing potential financial challenges in the current venture capital climate, M&A activity in the industry is expected to increase as larger corporations look to acquire talent and technology. OctoAI’s investors include Tiger Global Management, Addition, Madrona Venture Group, and Amplify Partners, with more than 100 employees as part of the company.
OctoAI’s CEO and co-founder, Luis Ceze, announced that he will be joining Nvidia. Ceze expressed his excitement about contributing to Nvidia’s efforts in machine learning compilers and cloud infrastructure for AI, stating that Nvidia is the ideal place to develop AI systems in the world. The company’s board of directors includes prominent figures such as Matt McIlwain of Madrona, Mike Dauber of Amplify Partners, Carlos Guestrin of Stanford University, and Lip-Bu Tan of Walden International. Additionally, OctoAI’s annual revenue was reported to be in the significant single-digit millions.
Through its collaboration with industry giants like AWS and Google, as well as generative AI companies, OctoAI has established itself as a valuable player in the AI technology space. The company’s integration of Nvidia’s NIM microservices product into its platform earlier this year further solidified its position in the industry. Although OctoAI will be winding down its commercial services by the end of October, its acquisition by Nvidia marks a strategic alignment that is seen as beneficial for both companies. Ceze’s background as a computer science professor at the University of Washington and his experience with previous startups, including Corensic, further bolster the potential for growth and success in this new phase for OctoAI under Nvidia’s ownership.
