Nvidia Expands AI Dominance with Acquisition of Seattle Startup OctoAI for $165 Million

Nvidia paid about $165 million to buy the Seattle-based company OctoAI in order to improve its AI and grow its generative AI business.

Nvidia, a US-based chip maker recently acquired OctoAI of Seattle famous for developing tools that help enhance the generative AI models. This acquisition is another aspect of Nvidia’s bold foray into the AI space. This is because of the high demand for its powerful GPUs, which are needed to train and run AI models.

There is now a big logo on OctoAI’s website that says “OctoAI is now NVIDIA.” This is a big change for the startup. Official statements from Nvidia about the acquisition have not been made public yet, but OctoAI has told its customers that its services will be stopped on October 31.

Financial Overview

Reports say that Nvidia was in advanced talks to buy OctoAI for about $165 million. The final price could have been higher than $250 million, taking into account bonuses for key team members. If you remember, OctoAI was worth about $900 million after getting $85 million in funding in 2021. This result reveals the current issues with venture capital, especially where growing interest rates have become an issue for many start-ups.

October AI was started in 2019 as a spin-off from the University of Washington. It has since raised more than $132 million. After changing its name to OctoAI earlier this year, the company has accomplished a great deal with OctoStack, which is said to represent the first complete tech stack for deploying generative AI models across various platforms.

AWS, Google, and some new creative AI companies have joined OctoAI to apply its highly developed solutions. It was during this year that OctoAI and Nvidia agreed to collaborate to incorporate Nvidia’s NIM microservices product into OctoAI. This makes their relationship even stronger.

Future Prospects and Employee Uncertainty

That is increasingly not the case today even as current workers of OctoAI have no idea of what their fate would be. In LinkedIn one of the members of the discussed team stated that the team members are now ‘free agents which can be freely translated as ‘now we are without work, we do not work for anybody.’CEO and co-founder Luis Ceze, on the other hand, will be joining Nvidia and is excited to help make machine learning tools and AI cloud infrastructure better.

Managing director at Madrona Venture Group and an early investor in OctoAI, Matt McIlwain, said he was confident in the strategic alignment of the purchase. He said that Nvidia was OctoAI’s “perfect partner” and that the two companies’ products would be better together in the fast-changing AI world.