Toronto-based Tenstorrent, which builds computers meant to train and run AI models, has closed a $100-million USD ($133.3 million CAD) funding round as it looks to advance product development in a time of accelerated AI adoption across a range of industries.
Tenstorrent raised $30 million from Hyundai and $20 million from Kia, with the remaining $50 million made up of contributions from the Samsung Catalyst Fund, as well as other investors including Fidelity Ventures, Eclipse Ventures, Epiq Capital, Maverick Capital, and others.
A spokesperson for Tenstorrent told BetaKit that the funding was raised via a convertible note, with the expectation that it will convert to equity when the company raises its Series D round “mid next year.” The company called the funding an up-round.
Tenstorrent aims to enter the automotive sector by working with Hyundai.
Convertible notes are typically valued following a company’s next equity fundraising, and while they may come with a valuation ceiling, rarely have a floor. However, one Canadian VC BetaKit spoke with on background noted that they had seen such a deal structure once before, with a company raising a large amount of funding from strategic investors. In that instance, the pricing floor was added due to the large round size and as protection in case the company IPO’d before raising another equity round.
A spokesperson for Tenstorrent declined to comment on the details of the round beyond noting “the contracts were written to ensure that the valuation, when converted, will be an up-round.”
Tenstorrent was reportedly valued at $1 billion USD when it closed a $200-million funding round in 2021. Including this round, the company has raised approximately $350 million USD in total funding to date.
With this funding and support from major auto and electronics manufacturers, Tenstorrent said its plans to accelerate the design and development of AI chiplets and its machine-learning software roadmap. Chiplets are tiny integrated circuits with a narrowly defined function. Tenstorrent’s plans will include hiring staff to help build the software and its chiplets.
With the rapid pace of development in AI, Tenstorrent said it has seen accelerating demand for its servers and cloud services. Additionally, “companies are reaching out left and right that want to incorporate our AI and RISC-V technologies into their own chips,” a representative from Tenstorrent said.
Founded in 2016, Tenstorrent builds AI processors for machine learning workloads. It also licenses AI and RISC-V intellectual property (IP) to customers who want to own and customize their chips.
Tenstorrent develops AI chips for a number of uses, working with a variety of industry partners. In July, Samsung’s semiconductor outsourcing division launched a research and development project with Tenstorrent and Groq, an American AI chip company with presence in Toronto, to develop AI semiconductors for use in advanced IT devices. In May, Tenstorrent also partnered with LG to build AI and RISC-V chiplets for smart TVs.
After Hyundai established its semiconductor development group earlier this year, the automaker said its investment in Tenstorrent will allow it to integrate AI into future Hyundai, Kia, and Genesis vehicles, as well as other mobility technologies, including robotics.
By working with Hyundai, Tenstorrent said it aims to enter the automotive sector based on its “AI semiconductor core IP competitiveness, a cadre of semiconductor experts and robust development direction.”
This funding round also follows a couple of major changes within Tenstorrent’s C-suite earlier this year.
In January, the startup announced the appointment of renowned chip designer Jim Keller as CEO, after joining the company as president and CTO two years ago. He switched roles with former Tenstorrent CEO Ljubisa Bajic, who took over Keller’s two previous titles.
Keller, who is known for his work with Apple, AMD, and Tesla, was also an angel investor in Tenstorrent prior to joining the company in 2021.
Speaking about this funding round, Keller said: “The trust in Tenstorrent shown by Hyundai Motor Group and Samsung Catalyst Fund leading our round is truly humbling.”
Noting Hyundai and Samsung’s lead in their respective auto and electronics industries, Keller said “We are excited by the opportunity to work together.”
With files from Douglas Soltys. Featured image courtesy Tenstorrent.