CoreWeave CEO Michael Intrator and Private Equity Giant Blackstone executives met at Wework in Brooklyn in the summer of 2023 to hash the terms of a massive, unusual loan.
That first deal led to Blackstone’s biggest single-loan commitment, one of the biggest private funds in US corporate history, turning a seven-year-old startup into an artificial intelligence infrastructure giant.
On Friday, CoreWeave became the largest tech company to go public in 18 months. The initial public offering was much smaller than planned, with about half of bankers increasing what they wanted from investors last week with a market valuation of $23 billion.
That fall reflects the company’s massive, huge debt burden, complex financial structure, close relationships with chipmaker Nvidia, and doubts about the high risk of customer concentration.
However, the listing remains a groundbreaking moment for the 55-year-old intrator, with its interest in the company worth around $3 billion. His appetite for extreme leverage and dangerous decision-making has grown CoreWeave from a small crypto business to an AI computing giant in a hyperscaler-dominated market like Microsoft and Amazon.
“It wasn’t like talking to Steve Jobs, who was trying to sell his vision,” said someone close to the Blackstone deal. “(Intrators) are people who are very rational and brainy, and don’t leave the details to others.”
The deal, agreed in July 2023, meant Blackstone would lead CoreWeave in debt capital of $2.3 billion, with revenues of just $16 million at the time. The vibrancy of Blackstone was a sign of the times. A few months ago, Openai released ChatGpt, with investors racing to access AI trading. Just a year later, Blackstone signed a second debt agreement with CoreWeave worth $7.6 billion.
The loan was protected against CoreWeave’s Nvidia Graphic Processing Unit (the hottest product for companies building AI systems) and contracts that agreed to leasing computing power to major high-tech companies.
Inplater used cash to buy tens of thousands of GPUs from Nvidia, expanding CoreWeave stockpile to over 250,000 chips, attracting more customers by 2024 and increasing revenue to $1.9 billion.
The success of these transactions is not at all present at CoreWeave’s scale, but it has pioneered a surge in asset-backed loans with other large investors expanding their loans to chip-rich startups.
“No one ever heard of GPU funding or CoreWeave before Blackstone gave them a massive loan,” said someone close to the deal.
Fortune and foresight meant that the intrators held their golden tickets the moment the AI industry hit a Cambrian explosion.
The intrator, wearing thick-rimmed glasses, a flannel shirt and a hoca trainer, spent most of his career as a merchandise trader, buying and selling carbon credits and natural gas futures. He first worked for Natsource, a manager of a renewable energy fund, and then for his own hedge fund, Hudson Ridge Asset Management.
He bought his first GPU while driving through Hudson Ridge and kickstarted the side hustle in crypto mining.
“In 2016, I bought my first GPU, plugged it in, and sat at a pool table in my Manhattan office, below overlooking the East River, mined my first block on the Ethereum network,” the Intrator wrote in a blog post.
He spun a venture into a company initially named Atlantic Crypto, along with co-founder Brian Venturo, a partner at Hudson Ridge, and Brian McBee, an energy trader for a Houston fund.
They quickly left Manhattan skyscrapers and feared that heat from servers would risk burning the building, so instead set it up in a garage outside New Jersey, which would become their first data center.
“One GPU’s got hundreds and then tens of thousands,” writes Intrator.
The crypto prices crashed in 2019, and when GPUs were purchased at a distressed price, the purchases accelerated. They pivoted the business, first leasing the capacity of video game renderings, then to AI developers.
This early prolific collection of GPUs made CoreWeave in good condition with Nvidia, adding the company to the “partner network” and allocating a significant total of chips. By early 2023, Nvidia was CoreWeave’s biggest supplier and one of its biggest customers, owning about 6% and investing $100 million in the company.
On Thursday, as CoreWeave was forced to cut the size and price of its IPO, Nvidia stepped in as one of its biggest buyers and spent $250 million to increase its interest in the business.
The intrator developed another early relationship, paying a large dividend to CoreWeave a few years later, according to people close to the company. Fluffefce Ai, a startup founded by Ex-Deepmind co-founder Mustafa Suleyman and LinkedIn founder Reid Hoffman, was one of CoreWeave’s first major clients. Suleyman moved to Microsoft early last year as head of the AI business.
By the end of last year, Microsoft had signed contracts worth around $10 billion, accounting for 62% of all revenue. People close to this issue said Suleyman and Hoffman, who are sitting on the Microsoft board, were at the heart of CoreWeave and the centre of the intrusion with Satya Nadella’s chief.
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According to IPO submissions, the three CoreWeave founders have already acquired fortunes, each of which has sold at least $150 million worth of shares in the company since December 2023.
CoreWeave’s list has been closely scrutinized in recent years as a signal of trust for large spending on AI.
Large tech companies have allocated hundreds of millions of dollars to build infrastructure that will boost AI models.
However, signs of oversupply are installed. Analysts say Microsoft has backed up construction in several data centers, and Nadella warned about “overbuilding” earlier this year. It also moved away from a multi-billion dollar commitment to CoreWeave, which hadn’t yet signed it as a contract, according to people familiar with the matter.
Faced with staged, difficult questions to the IPO, the intrator is not a hard cell fan or a spotlight, according to people close to him. Living in the open market can cause more anxiety.
On Friday, just before CoreWeave began trading, the Internet told the Financial Times it would “take some time” for public market investors to understand its business model.
“But our expectations are that the stock market is very similar to the debt market after it has been able to spend time with the company. They will be very comfortable.”
