Together AI raises $800M at $8.3B valuation

Together AI, an AI neocloud that rents out Nvidia GPU clusters and other AI-specific infrastructure, has raised an $800 million Series C at an $8.3 billion valuation. The company announced the funding on Wednesday. The round was led by Aramco Ventures, with participation from Vista Equity Partners, General Catalyst, Emergence Capital, Nvidia, March Capital, Pegatron, SentinelOne's S Ventures, and others.

Together AI was founded in 2022 and last raised a $305 million Series B at a $3.3 billion valuation about 16 months ago. The company came out of the gate well-funded, with a $102.5 million Series A funding round led by Kleiner Perkins with participation from Nvidia and Emergence Capital back in 2023. There were whispers of this round back in March, when The Information reported that the company was seeking $1 billion in funding, but at a $7.5 billion valuation.

If the numbers in that report were accurate, it means that Together AI took less money but perhaps got a better deal from VCs than it had been pursuing in the spring. The hefty infusion of capital comes as Together AI claims annual bookings of over $1.15 billion as of its last quarter, as companies increasingly adopt competent yet far less expensive open source models via neocloud providers like Together AI. They are increasingly turning to this option rather than pay the premiums on tokens for closed frontier models for all their AI usage.

This has tripled usage of open source models across the industry in the past year, Together AI says, pointing to research from another company cashing in on the trend, AI gateway OpenRouter. Together AI says it has thousands of paying customers, naming Cursor, Cognition, and Decagon among them. Neoclouds have been hot commodities for VC investment more broadly, not just Together AI.

Upscale AI raised a Series A plus in an extension totaling $500 million at a $2 billion valuation last month; TensorWave — which focuses on GPU clusters from AMD — raised a $350 million Series B at $1.55 billion valuation last month as well. Together AI was co-founded by Vipul Ved Prakash after he sold his previous startup, social media search platform Topsy, to Apple in 2013 for a reported $200+ million. His Together AI co-founders are Stanford professor Percy Liang and ETH Zürich/University of Chicago associate professor Ce Zhang.

Why this matters: The massive funding round for Together AI underscores the growing demand for accessible, affordable AI infrastructure. As companies increasingly turn to open-source models and neocloud providers, the market is shifting towards more cost-effective solutions. This trend has significant implications for the broader AI industry, as it could democratize access to AI capabilities and accelerate adoption across various sectors.

For developers and businesses, this means more options for leveraging AI without breaking the bank. However, questions remain about the long-term viability of neocloud providers and their ability to maintain profitability. As the AI landscape continues to evolve, it will be crucial to monitor how Together AI and its competitors navigate the challenges and opportunities ahead.