The startup Groq has raised 350 million dollars (around 300 million euros) in new capital. The investment values it at 3.5 billion dollars. Last September the same company was worth 6.9 billion. So half the valuation evaporated in less than a year, and that is the number the whole story turns on.

The company spokesperson has an answer ready: this was not a drop in value but „a new assessment for the version of Groq following the licensing agreement with Nvidia”. A nice sentence. Translated into human: Nvidia paid 20 billion dollars for a licence and in the same package took founder and chief executive Jonathan Ross and the top team. Investors got their share. The company was left without the people who made it worth that much.

Groq was conceived as a rare thing - a genuine challenger to Nvidia. It made its own chips called LPUs, aimed precisely at inference, meaning running models in real time, the part that consumes the most computing power day to day. That was the point of the company.

After the exodus of the team, Groq stopped being a chipmaker and remade itself as a cloud provider running Nvidia systems. From competitor to customer in under a year. In June it raised 650 million to begin the pivot, now another 350, and it plans to grow from 54 to over 200 megawatts by 2027. Today it has 13 data centres in North America, Europe, the Middle East and Asia-Pacific, with over six million users among developers and companies.

The investment is led by the Disruptive fund, and Nvidia is expected to participate too. Read that sentence again: Nvidia took its team, then comes in as an investor in what remains and which now buys its chips. „We are building Groq into the world's leading inference cloud”, said Alex Davis, chairman of Groq and chief executive of Disruptive. Nvidia already supplies CoreWeave, Lambda and Nebius, while simultaneously investing billions in some of them.

Whether such a business ultimately makes money is still an open question. CoreWeave posted solid revenue growth in the second quarter and signed large contracts, including with Meta and Anthropic. Investors are nonetheless worried about the same things: enormous capital costs, a lot of debt, and equipment that loses value faster than it is paid off. Groq's financial figures remain private.

The conclusion is quieter than the press release headline. When a company raises hundreds of millions, it means somebody believes in it - but it does not have to mean it is worth more than last year. Sometimes it means it has a long list of bills to pay.