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Lambda is a cloud provider specializing in GPUs and high performance computing
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It is using its GPUs - and the revenue they generate - as collateral for $500 million in fresh funding
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Fiber providers have started using similar deal structures to raise funding
Lambda is kind of like a dragon, except instead of hoarding treasure it’s looking to hoard GPUs.
Like CoreWeave, RunPod and others, Lambda is a niche cloud provider specializing in providing GPUs for AI workloads. It currently has around 100,000 customers signed up to use its service, which offers access to top of the line compute resources like Nvidia’s H100 and H200 GPUs, Grace CPU and DGX system. But now, the company is putting its most valuable asset on the line in exchange for cash to buy more of the same.
Lambda struck a deal with financial services firm Macquarie Group and investment company Industrial Development Funding using its existing GPUs as collateral for $500 million in funding.
Mitesh Agrawal, Lambda COO, said in a statement it will use the money to fuel the “deployment of tens of thousands of NVIDIA GPUs.”
The move comes follows Nvidia’s recent launch of its B200 Blackwell chip, which runs around $40,000.
Inclusive of the $320 million Lambda raised in a Series C funding round last month, $44 million it raised in March 2023 and $24.5 million it secured in 2021, Lambda has raised nearly $900 million in publicly disclosed funding. The company said its 2021 funding round was its third round of financing but the first it ever discussed openly.
Lambda’s deal is a form of asset-backed securitization (ABS), with the company’s GPUs and the revenue they generate serving as the aforementioned collateral supporting the deal. Agrawal said the arrangement was the “first-of-its-kind” involving GPUs.
As we recently noted, ABS transactions are also starting to pop up in the telecom realm, with fiber providers like Frontier using their network assets as collateral.
Lambda rival CoreWeave has also been on the fundraising hamster wheel as of late, most recently raising $642 million from a fundraising round in December. The company has been growing rapidly, expanding from three to 14 data centers and quadrupling its headcount in a 12-month span.
Could it or another of Lambda's competitors strike an ABS deal to get their hands on more GPUs? Maybe. And you bet we'll be watching closely to see if they do.