CoreWeave Founders Cash Out Before $4 Billion IPO

CoreWeave's IPO Filing Reveals Key Details

The initial S-1 filing submitted by CoreWeave in preparation for its forthcoming IPO contains several noteworthy revelations.

GPU Infrastructure and Backing

Supported by Nvidia, CoreWeave operates a cloud service specifically designed for AI workloads. As of late 2024, the company’s network comprises 32 data centers equipped with over 250,000 Nvidia GPUs.

Recently, CoreWeave has integrated Nvidia’s newest Blackwell product line, enhancing its capabilities in AI reasoning.

IPO Valuation Estimates

While the precise number of shares and offering price are yet to be determined, Renaissance Capital, a leading IPO analysis firm, projects CoreWeave aims to secure at least $3.5 billion through the IPO.

This would value the company at $32 billion, with potential to exceed $4 billion.

Growth from Previous Valuation

This represents a significant increase compared to the company’s November valuation of $23 billion, established during a $650 million secondary share sale, as previously reported by Reuters.

Founder Share Sales

A surprising aspect of the filing is the extent to which the company’s three co-founders have already divested their Class A shares through tender offers in 2023 and 2024.

Collectively, the founders have realized approximately $488 million from these share sales.

Founder Ownership and Control

Specifically, Michael Intrator, the CEO and chairman, sold around $160 million worth of shares.

Brian Venturo, the chief strategy officer, sold approximately $177 million, while Brannin McBee, the chief development officer, sold roughly $151 million.

Despite reducing their Class A share ownership to under 3%, the founders will maintain control of CoreWeave through their substantial holdings of Class B shares.

These Class B shares carry 10 votes each, granting them approximately 80% of the voting power.

Unique Backgrounds of the Founders

Interestingly, the backgrounds of the three founders are rooted in finance rather than technology.

They previously worked within the oil industry’s hedge fund sector.

Prior to CoreWeave, Intrator established and managed a natural gas hedge fund, collaborating with Venturo.

McBee formerly served as a trader at another similar hedge fund, as detailed in the S-1 filing.

Technical Expertise Added

To strengthen their technical expertise, they recruited Chen Goldberg from Google Cloud as CoreWeave’s senior vice president of engineering.

Goldberg previously led Google’s Kubernetes and serverless teams.

Nvidia Partnership and Revenue Growth

Nvidia holds a stake exceeding 6% in CoreWeave and also utilizes its services, forming a strong strategic alliance.

Access to Nvidia’s sought-after GPUs has fueled substantial revenue growth for CoreWeave.

In 2024, revenue reached $1.9 billion, a nearly eightfold increase from $228.9 million in 2023.

Customer Concentration and Competition

However, a significant portion of this revenue, 62%, is attributable to a single customer: Microsoft.

CoreWeave identifies both Microsoft and IBM as both customers and competitors.

Notable Customer Base

Despite this concentration, CoreWeave boasts an impressive customer roster, including Cohere, Meta, and Mistral.

Financial Performance and Debt

Despite the impressive revenue growth, CoreWeave remains unprofitable, reporting substantial losses of $863 million in 2024.

The company also carries a significant debt load of $7.9 billion.

Debt as a Strategic Asset

The founders, leveraging their financial acumen, position this debt as a strategic asset rather than a liability.

They describe their financial approach as “sophisticated” and claim to have “pioneered GPU infrastructure-backed lending.”

The value of their GPU assets allows them to be used as collateral.

Cost of Servicing Debt

Servicing this debt incurs substantial costs – $941 million in 2024 alone – contributing to the company’s overall losses.

CoreWeave intends to allocate some of the IPO proceeds towards reducing its debt burden.

IPO Potential

The success of this IPO remains to be seen.

However, there is considerable investor interest in backing companies demonstrating strong revenue generation in the AI sector, and CoreWeave clearly fits that profile.

CoreWeave declined to provide additional commentary.