Seattle-based software startup OctoAI, which specializes in tools for building and running generative AI models efficiently, has been acquired by Nvidia, a prominent chip manufacturer. The company’s homepage now reflects the acquisition, displaying the message “OctoAI is now NVIDIA.” Customers were informed via email that OctoAI’s commercial services would be discontinued as of October 31st. OctoAI CEO Luis Ceze declined to comment on the acquisition.
Nvidia’s acquisition of OctoAI is part of a series of AI-related acquisitions the company has made recently. The chipmaker has been capitalizing on the AI boom, leveraging its GPUs for training and running AI models. It was reported that Nvidia was in discussions to acquire OctoAI for approximately $165 million, but the total deal value may exceed $250 million with incentives for retaining key members of the OctoAI team. Despite OctoAI’s valuation of around $900 million in a previous funding round, the outcome for investors is not expected to be significant.
As the venture capital market has slowed in recent years, some startups are finding it challenging to secure additional funding. AI startups remain a significant source of funding, but there is also an expectation of increased M&A activity as companies face financial difficulties and larger corporations seek to acquire talent and technology. Recently, there has been more scrutiny on deals between tech giants and smaller startups, particularly those structured as “reverse acquihires,” which involve hiring founders and licensing technology.
OctoAI received over $132 million in funding since its inception in 2019 when it spun off from the University of Washington. The company’s founders were involved in creating Apache TVM, an open-source “deep learning compiler stack.” OctoAI released OctoStack in May, which is touted as the industry’s first complete tech stack for serving generative AI models. Originally known as OctoML, the company rebranded to OctoAI to better reflect its expanding offerings to help companies deploy machine learning models on various hardware configurations.
OctoAI’s customers and partners include major hardware and software companies such as AWS, Google, and other generative AI companies. The startup had collaborated with Nvidia earlier in the year to integrate Nvidia’s NIM microservices product into its platform. CEO Luis Ceze, a respected computer science professor at the University of Washington and former finalist for CEO of the Year at the GeekWire Awards, co-founded OctoAI with Jared Roesch, Tianqi Chen, Jason Knight, and Thierry Moreau. The company’s board includes prominent figures from companies such as Amplify Partners and Madrona as well as Stanford University.
While it remains uncertain what will happen to current OctoAI employees, one worker referred to themselves and their colleagues as “officially free agents.” The acquisition of OctoAI by Nvidia was structured as a traditional M&A deal, marking another significant move for both companies in the AI space. OctoAI’s acquisition is indicative of the growing trend of tech giants acquiring smaller startups for their talent and technology, highlighting the competitive landscape within the AI industry.
