Chip giant Nvidia has acquired Seattle-based startup OctoAI, which specializes in developing tools to optimize the building and deployment of generative AI models. This acquisition is the latest in a series of AI-related deals for Nvidia, a dominant player in the chip industry, benefiting from the surge in AI demand due to its widely used GPUs.
OctoAI, which recently updated its homepage with the message “OctoAI is now NVIDIA,” informed customers via email that it will cease commercial operations by October 31. According to reports, Nvidia was initially in talks to acquire OctoAI for around $165 million, but a source indicated that the deal could reach over $250 million, including incentives for retaining key personnel.
Founded in 2019 as a spinout from the University of Washington, OctoAI raised more than $132 million in funding and was valued at approximately $900 million in 2021. The company was previously known as OctoML but rebranded earlier this year to reflect its evolving product offerings. OctoAI’s platform, which includes the recently launched OctoStack, serves as a comprehensive tech stack for running generative AI models across different hardware configurations.
OctoAI’s co-founder and CEO Luis Ceze announced on LinkedIn that he will be joining Nvidia, expressing excitement about contributing to Nvidia’s efforts in machine learning compilers and AI cloud infrastructure. The future of OctoAI’s over 100 employees remains uncertain, with some team members already referring to themselves as “free agents” on LinkedIn.
Nvidia, which has made multiple AI-related acquisitions in 2023, structured this deal as a traditional M&A transaction. OctoAI had significant backing from investors including Tiger Global Management, Madrona Venture Group, and Amplify Partners. The startup’s customers and partners include major tech players like AWS, Google, and Nvidia itself, with which OctoAI had collaborated earlier this year.
Matt McIlwain, managing director at Madrona, praised the acquisition, calling Nvidia the “perfect partner for OctoAI” and highlighting the strategic alignment between the two companies. He noted that OctoAI had reached “significant single-digit millions” in annual revenue prior to the acquisition.
Luis Ceze, a well-known figure in the AI community and professor at the University of Washington, co-founded OctoAI with a team that included researchers behind the Apache TVM deep learning compiler stack, a notable project from the university’s computer science department.