College dropouts raise $120 million to take on Nvidia’s AI chips
Etched co-founders Robert Watchen, Gavin Uberti, and Chris Zhu
Etched
Nvidia has been the hottest story on Wall Street of late, increasing eightfold in value since the end of 2022 and soaring past $3 trillion in market cap this month.
A 2-year-old startup founded by Harvard dropouts has just raised $120 million in venture funding to try and build a competitive chip and take on Nvidia in artificial intelligence.
Headquartered in Cupertino, California — home to Apple — Etched is developing a chip called Sohu, which the company says will be used to train and deploy AI models using “transformers,” the core architecture underpinning advancements like OpenAI’s ChatGPT.
Co-founder and CEO Gavin Uberti said that as AI develops, most of the technology’s power-hungry computing requirements will be filled by customized, hard-wired chips called ASICs. Their efficiency comes in executing only the AI model they were designed to perform, in contrast to general purpose graphics processing units (GPUs) from Nvidia that are more capable but are also much costlier.
“We’re making the biggest bet in AI,” Uberti said in an interview. “If transformers go away, we’ll die. But if they stick around, we’re the biggest company of all time.”
Uberti and his co-founders are aware that it’s a high-risk wager, and that they’re going up against some of the most richly capitalized and competitive companies on the planet. While $120 million is a lot of money to raise in a series A, it’s about how much Nvidia generates in revenue in half a day. Nvidia’s sales have more than tripled annually for three consecutive quarters, topping $26 billion in the latest period.
Nvidia has more than 80% of the market share for AI chips, according to estimates. Etched is among a group of startups attracting capital to go after the burgeoning opportunity. Primary Venture Partners led the round. Peter Thiel, Stanley Druckenmiller and Cruise founder Kyle Vogt are also backers.
Despite Nvidia’s head start and, what some developers describe a moat, new chipmakers are plowing ahead anyway, mainly because the opportunity is so big. Other chip startups taking on Nvidia include Cerebras Systems, which is building a physically larger AI chip, and Tenstorrent, which is using a trendy technology called RISC-V to build AI chips.
“The reason we were so excited about what we’re doing, why we dropped out of school and we’ve convinced so many people to leave these chip projects — this is the most important thing to be working on,” said Robert Wachen, Etched’s operating chief. “The entire future of technology is going to be shaped by whether the infrastructure can handle the scale.”
Semiconductors have traditionally been one of the hardest industries for startups given the long development cycles, the significant capital required to build a chip and the need to engage with a limited number of manufacturing partners, such as Taiwan Semiconductor Manufacturing Co., which is building Etched’s chip.
Venture capitalists invested $6 billion in AI semiconductor companies in 2023, up slightly from $5.7 billion in 2022, according to data from PitchBook.
Hard coded
Etched’s Sohu chip
Uberti and Chris Zhu started to work on a chip company after Uberti did a summer internship working on compliers. That put him in contact with the low-level hardware ideas that led to Etched.
The pair dropped out of Harvard in 2022, and added Uberti’s college roommate, Wachen. They quickly started hiring chip industry veterans. The company settled in Cupertino, and now has 35 employees. It offers housing stipends to new hires.
“When ChatGPT came out, and Nvidia stock exploded, and especially when every other model coming out would be a transformer too, we found ourselves in the right place at the right time,” Uberti said.
Etched is preparing to bring Sohu to market, and the founders say they’ll be ready to show something later this year. The startup is also working to secure customers and says that technology companies are eager to check out new AI chips.
For the business to work, companies that are spending billions of dollars on GPUs will need to see some significant savings in building custom chips designed for their specific AI model and be willing to make trade-offs in flexibility.
By specializing on transformers, which moves data in predictable ways from the chip to memory, Etched’s Sohu chip can dedicate less space to memory and more to the kinds of transistors that define a chip’s raw computing power, Uberti said.
Another aspect of Eteched’s efficiency is that the chip has one large core. That results in fewer inefficient calculations done by a part called a streaming multiprocessor to coordinate calculations by different cores.
Uberti says the impact of specialized AI chips could be similar to how custom chips called ASICs, first introduced in 2013 specifically for mining bitcoin or ether, reduced the demand for Nvidia GPUs.
The Etched founders expect the need for chips to run these models will increase, especially once they’re used to serve AI software millions of times per minute.
They also say that by hard coding the AI architecture into the chip, their device can reduce the latency of returning answers, unlocking new use cases, such as AI agents or real-time voice conversations. Etched says its chips are more than 10 times faster than Nvidia’s GPUs, thanks to its simpler architecture and single use case.
But Etched is taking on some of the most valuable companies in the world, including Nvidia, which have massive development teams and access to the capital needed to secure production and improve their chips on an annual basis.
Etched, which has a countdown timer displayed in its headquarters, has to move faster.
“The way that we’re going to win this specialized AI chip market, and the ones after this, is by being the first product to market,” Uberti said.
Technology
Spotify paid over $100 million to podcasts in the first quarter, including Joe Rogan, Alex Cooper and Theo Von
Palo Alto Networks signage displays on the screen at the Nasdaq Market in New York City, U.S., March 25, 2025.
Jeenah Moon | Reuters
Palo Alto Networks announced on Monday its intent to acquire Protect AI, a startup specializing in securing artificial intelligence and machine learning applications, for an undisclosed sum.
The deal is set to close by the first quarter of fiscal year 2026.
“By extending our AI security capabilities to include Protect AI’s innovative solutions for Securing for AI, businesses will be able to build AI applications with comprehensive security,” said Anand Oswal, senior vice president and general manager of network security at Palo Alto Networks, in a release.
Palo Alto has been steadily bolstering its artificial intelligence systems to confront increasingly sophisticated cyber threats. The use of rapidly built ecosystems of AI models by large enterprises and government organizations has created new vulnerabilities. The company said those risks require purpose-built defenses beyond conventional cybersecurity.
The acquisition would fold Protect AI’s solutions and team into Palo Alto’s newly announced Prisma AIRS platform. Palo Alto said Protect AI has established itself as a key player in what it called a “critical new area of security.”
Protect AI’s CEO Ian Swanson said joining Palo Alto would allow the company to “scale our mission of making the AI landscape more secure for users and organizations of all sizes.”
The company’s stock price is up 23% in the past year lifting its market cap close to $120 billion. Palo Alto reports third-quarter earnings on May 21.
Year-to-date stock chart for Palo Alto Networks
Technology
Cloud software vendors Atlassian, Snowflake and Workday are betting on security startup Veza
From left, Veza founders Rob Whitcher, Tarun Thakur and Maohua Lu.
Veza
Tech giants like Google, Amazon, Microsoft and Nvidia have captured headlines in recent years for their massive investments in artificial intelligence startups like OpenAI and Anthropic.
But when it comes to corporate investing by tech companies, cloud software vendors are getting aggressive as well. And in some cases they’re banding together.
Veza, whose software helps companies manage the various internal technologies that employees can access, has just raised $108 million in a financing round that included participation from software vendors Atlassian, Snowflake and Workday.
New Enterprise Associates led the round, which values Veza at just over $800 million, including the fresh capital.
For two years, Snowflake’s managers have used Veza to check who has read and write access, Harsha Kapre, director of the data analytics software company’s venture group told CNBC. It sits alongside a host of other cloud solutions the company uses.
“We have Workday, we have Salesforce — we have all these things,” Kapre said. “What Veza really unlocks for us is understanding who has access and determining who should have access.”
Kapre said that “over-provisioning,” or allowing too many people access to too much stuff, “raises the odds of an attack, because there’s just a lot of stuff that no one is even paying attention to.”
With Veza, administrators can check which employees and automated accounts have authorization to see corporate data, while managing policies for new hires and departures. Managers can approve or reject existing permissions in the software.
Veza says it has built hooks into more than 250 technologies, including Snowflake.
The funding lands at a challenging time for traditional venture firms. Since inflation started soaring in late 2021 and was followed by rising interest rates, startup exits have cooled dramatically, meaning venture firms are struggling to generate returns.
Wall Street was banking on a revival in the initial public offering market with President Donald Trump’s return to the White House, but the president’s sweeping tariff proposals led several companies to delay their offerings.
That all means startup investors have to preserve their cash as well.
In the first quarter, venture firms made 7,551 deals, down from more than 11,000 in the same quarter a year ago, according to a report from researcher PitchBook.
Corporate venture operates differently as the capital comes from the parent company and many investments are strategic, not just about generating financial returns.
Atlassian’s standard agreement asks that portfolio companies disclose each quarter the percentage of a startup’s customers that integrate with Atlassian. Snowflake looks at how much extra product consumption of its own technology occurs as a result of its startup investments, Kapre said, adding that the company has increased its pace of deal-making in the past year.
‘Sleeping industry’
Within the tech startup world, Veza is also in a relatively advantageous spot, because the proliferation of cyberattacks has lifted the importance of next-generation security software.
On the public markets, the First Trust Nasdaq Cybersecurity ETF, which includes CrowdStrike and Palo Alto Networks, is up 3% so far this year, compared with a 10% drop in the Nasdaq.
Veza’s technology runs across a variety of security areas tied to identity and access. In access management, Microsoft is the leader, and Okta is the challenger. Veza isn’t directly competing there, and is instead focused on visibility, an area where other players in and around the space lack technology, said Brian Guthrie, an analyst at Gartner.
Tarun Thakur, Veza’s co-founder and CEO, said his company’s software has become a key part of the ecosystem as other security vendors have started seeing permissions and entitlements as a place to gain broad access to corporate networks.
“We have woken up a sleeping industry,” Thakur, who helped start the company in 2020, said in an interview.
Thakur’s home in Los Gatos, California, doubles as headquarters for the startup, which employs 200 people. It isn’t disclosing revenue figures but says sales more than doubled in the fiscal year that ended in January. Customers include AMD, CrowdStrike and Intuit.
Guthrie said enterprises started recognizing that they needed stronger visibility about two years ago.
“I think it’s because of the number of identities,” he said. Companies realized they had an audit problem or “an account that got compromised,” Guthrie said.
AI agents create a new challenge. Last week Microsoft published a report that advised organizations to figure out the proper ratio of agents to humans.
Veza is building enhancements to enable richer support for agent identities, Thakur said. The new funding will also help Veza expand in the U.S. government and internationally and build more integrations, he said.
Peter Lenke, head of Atlassian’s venture arm, said his company isn’t yet a paying Veza client.
“There’s always potential down the road,” he said. Lenke said he heard about Veza from another investor well before the new round and decided to pursue a stake when the opportunity arose.
Lenke said that startups benefit from Atlassian investments because the company “has a large footprint” inside of enterprises.
“I think there’s a great symbiotic match there,” he said.
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