Naveen Rao's AI Hardware Startup Aims for $5B Valuation - A16Z Backing

Unconventional, Inc. Secures Funding for Novel Computing Architecture

Naveen Rao, formerly leading artificial intelligence initiatives at Databricks, is reportedly in negotiations to secure $1 billion in funding for his new venture, Unconventional, Inc. This funding would value the company at $5 billion.

Investment Details and Key Players

Andreessen Horowitz is poised to spearhead the investment round. Furthermore, Lightspeed and Lux Capital are also expected to participate in the deal, according to sources close to the discussions.

However, requests for confirmation from the aforementioned venture capital firms have currently gone unanswered.

Databricks is also reportedly contributing to the funding of Rao’s new company, as previously reported by Bloomberg last month.

Phased Funding Approach

Rao has already secured substantial initial funding. He intends to commence building the startup’s infrastructure prior to the complete closure of the $1 billion round.

The remaining capital will be raised in stages, a strategy commonly known as a “tranched” funding round.

Vision for a New Computing Substrate

While Rao declined to provide direct commentary, he publicly acknowledged the existence of Unconventional, Inc. on X (formerly Twitter) last week.

He described the company’s objective as “rethinking the foundations of a computer to build a new substrate for intelligence that is as efficient as biology. Brain Scale Efficiency without the biological baggage!”

Rao’s Track Record and Expertise

In 2023, Databricks acquired Rao’s previous company, MosaicML, for $1.3 billion.

MosaicML, founded by Rao in 2020, specialized in the training and deployment of large AI models. The company had previously raised $33.7 million in investment, attracting support from firms like Lux Capital, DCVC, Playground Global, and Samsung Next, as per PitchBook data.

Prior to MosaicML, Rao was a co-founder of Nervana Systems, a machine learning platform that was acquired by Intel Corp. in 2016 for a reported sum exceeding $400 million.

Departure from Databricks and Competitive Landscape

Rao served as VP of AI at Databricks for over two years. Databricks currently holds a valuation of $100 billion and generates $4 billion in Annual Recurring Revenue (ARR).

He left Databricks last month to dedicate his focus to Unconventional, Inc., as indicated by his LinkedIn profile and earlier reports from Bloomberg.

Sources suggest that Rao’s vision is designed to directly compete with Nvidia. The company plans to develop a novel AI machine encompassing both custom silicon chips and dedicated server infrastructure.