Naveen Rao's Secret AI Hardware Startup Aims for $5B Valuation to Challenge Nvidia's Dominance

Image Credits: Naveen Rao

The Rise of a New AI Hardware Challenger

Naveen Rao, the former head of artificial intelligence at Databricks, is in advanced discussions to raise $1 billion at a staggering $5 billion valuation for his new startup, Unconventional, Inc., according to four sources familiar with the matter. The company is developing a revolutionary type of computer designed to compete directly with Nvidia.

Major Backing from Top-Tier Investors

Andreessen Horowitz has committed to leading this massive investment round, with participation from Lightspeed and Lux Capital, two sources confirmed. While these VC firms haven't commented publicly, the involvement of such prominent names signals strong confidence in Rao's vision. Additionally, Databricks is reportedly investing in the new venture, as Bloomberg previously revealed.

Aggressive Funding Strategy

Rao has already secured hundreds of millions in initial funding and plans to begin operations without waiting for the full $1 billion to close. The remaining capital will be raised in installments through a tranched funding round, allowing for flexible capital deployment as the company scales.

Vision for Revolutionary AI Computing

Although Rao declined to comment directly, he publicly acknowledged the startup on X, describing its ambitious goal: "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!" This suggests a focus on creating highly efficient AI systems that mimic biological intelligence.

Proven Track Record in AI Innovation

Rao's previous startup, MosaicML, was acquired by Databricks in 2023 for $1.3 billion. Founded in 2020, MosaicML specialized in training and deploying large AI models and had raised $33.7 million from investors including Lux Capital, DCVC, Playground Global, and Samsung Next. Before that, Rao co-founded Nervana Systems, a machine learning platform acquired by Intel in 2016 for over $400 million.

Departure from Databricks to Focus on New Venture

Rao recently left his role as VP of AI at Databricks, a company now valued at $100 billion with $4 billion in annual recurring revenue, to dedicate himself fully to Unconventional, Inc. His departure and the startup's formation were first reported by Bloomberg last month.

Direct Competition with Nvidia

Sources indicate that Rao's vision involves designing a novel AI machine that integrates both custom silicon chips and server infrastructure, positioning it as a direct competitor to Nvidia in the AI hardware space.