Big idea:

• Crusoe Energy, a data center start-up, is raising $500 million in equity capital led by Peter Thiel’s Founders Fund. This new fund values the company at approximately $3 billion, more than double its valuation two years ago.

Why it matters:

• This fundraising highlights the growing investment in AI infrastructure, driven by the demand for advanced, AI-powered data centers. Tech companies continue to seek well-developed infrastructure to support machine learning and other resource-intensive applications.

Key details:

• Crusoe Energy was founded in 2018 by Chase Lochmiller, a quantitative trader, and Cully Cavness, an energy investment banker.
• Founders Fund, an early Crusoe investor, led the $500 million round, raising the company’s valuation to approximately $3 billion.
• Crusoe initially focused on harnessing oilfield waste gasses for energy-intensive computing tasks but shifted to building more permanent data center facilities in 2020.
• The recent funding round comes alongside a $3.4 billion joint venture with Blue Owl Capital and Primary Digital Infrastructure to build a new data center in Texas. This data center will be leased to Oracle.

What's next:

• The ‘Neocloud’ sector will gain traction as companies increasingly look to provide a differentiated service from traditional hyperscalers. 
• Crusoe will use the new funds to improve its facilities and expand its capacity to support AI workloads.
• Will monitor how real estate-like data infrastructure development projects are separated from the operational GPU cloud owned by Crusoe. The best Neoclouds will be the strongest cloud operators.

Proof points: 

• Over 40% of the $93 billion spent by venture capitalists in early 2024 was directed towards AI start-ups.
• CoreWeave, a leading neocloud company, has raised over $12 billion in debt and equity in the past 18 months, highlighting the growing investment trend in AI infrastructure.
• Crusoe raised $200 million in debt from Upper90 last year using Nvidia chips as collateral. This capital was used to buy thousands of Nvidia’s H100 GPUs, strengthening its AI cloud capabilities.

Big idea:

• Andreessen Horowitz (a16z) has launched “Oxygen,” a private GPU cluster program that provides Nvidia H100 GPUs to AI-focused startups in their portfolio. The program will support startups by giving them access to the computational power needed for AI model training and deployment without negotiating market rates.

Why it matters:

• The Oxygen program addresses a critical supply crunch for GPUs, particularly Nvidia’s H100s, which has disproportionately affected AI startups. Startups often struggle to secure these resources as they face stiff competition from tech giants like Google, Meta, and Microsoft, which can offer large contracts. 
• This program allows startups to access GPUs with fewer financial and logistical constraints, leveling the playing field and enabling AI innovation outside big tech.

Key details:

• AI startups face a supply crunch, with major tech companies securing GPU resources through long-term contracts.
• Oxygen provides computing power for model training on a short-term basis, allowing startups to avoid substantial cash outlays and lengthy commitments.
• Startups give a16z an equity stake in exchange for affordable GPU access, making Oxygen an investment strategy and a competitive advantage for a16z.
• While exact cluster size details remain undisclosed, reports indicate that Oxygen could house over 20,000 GPUs, potentially making it the largest GPU resource offered by a venture firm.

“This started from a realization that a number of the AI founders we serve every day had a common problem: We were in the middle of a supply crunch, where Nvidia H100 capacity was in short supply,” said a16z partner Anjney Midha, highlighting the demand and need for Oxygen.

What's next:

• Andreessen Horowitz plans to continue expanding the Oxygen program as the demand for AI compute resources grows, especially if the AI boom continues as projected.
• By offering infrastructure support in addition to capital, a16z will strengthen its relationships with AI startups and might draw in new portfolio companies.

Proof point: 

• The Oxygen program is part of a growing trend among investors to support portfolio companies with critical resources beyond traditional financial backing. Similar initiatives, such as Nat Friedman and Daniel Gross’s Andromeda Cluster and Y Combinator’s GPU partnerships, show a shift toward resource-based support to strengthen the competitive position of startups in the AI space.

What’s happening:

• Following its $20 million Series A round in August 2023, Socket has now raised an additional $40 million in Series B funding led by Andreessen Horowitz. The fresh capital will fuel the expansion of Socket’s open-source cybersecurity platform, which detects threats in software dependencies. 

Why it matters:

• Open-source software is an important part of modern technology infrastructure but the rapid adoption of open-source components makes it vulnerable to dependency attacks. With the new funds, Socket has the resources to scale its security solutions. 
• Socket’s solutions help developers catch threats early, preventing costly breaches and securing a critical aspect of software development.

Socket’s strengths:

• Uses AI to analyze software dependencies, allowing the platform to effectively identify vulnerabilities and prevent zero-day supply chain attacks.
• Socket's platform is designed to continuously monitor open-source packages for threats, allowing it to detect and block malicious behaviors such as malware, backdoors, and typo-squatting in real time.
• The platform is tailored for developers, allowing them to integrate security measures into their workflows without affecting speed or efficiency. 

By numbers:

• Founded in 2020, the company expanded from 5 employees to 32 and aims to reach 100 within a year.
• The startup secured $20 million in a Series A round in August 2023 and a $40 million Series B in 2024.
• It is anticipated to grow revenue by  400% in 2024. 

What next:

• Socket plans to use its funding to hire more engineers, product people, designers, and salespeople and try to deliver its roadmap faster for its customers. It looks to expand its workforce from 32 to 100 employees.
• It will use investor networks, like Andreessen Horowitz and Abstract Ventures, to grow more efficiently and extend market reach. 
• The company aims to develop more features tailored to enterprise needs while continuing to refine its platform's capabilities in response to evolving software threats.