Groq, the AI chip startup that in December "didn't sell" its technology to Nvidia for 20 billion dollars, is now asking for another 650 million dollars from the same investors who just took a cash exit. As Axios reports, the new round will go into its "inference cloud" business - a service that hosts AI applications for developers.

The deal with Nvidia was one of those corporate arrangements that aren't a sale but look like one: some of Groq's senior engineers moved to Nvidia, Groq's technology was licensed, and Groq's investors received a cash payout - at the level of what would have been the biggest acquisition in Nvidia's history. All without a formal acquisition deal. A classic Silicon Valley manoeuvre for working around regulators.

Now those same investors are being asked to fund the next act. Inference - the processing that happens once the AI model has received the query - is at this moment a bigger demand than training new models. Every ChatGPT answer, every Claude letter, every Gemini search is inference. The business is enormous and Groq sees it as the field where it can be a major player without colliding head-on with Nvidia.

The financial backing for the 650 million is all but complete. Two existing investors, Disruptive and Infinitium, have committed to filling the round if the other shareholders do not take pro-rata stakes. In investment speak - that means the deal is already closed, they are just waiting for an external validator to sign it at a higher valuation. The classic position from which valuations grow and later turn out to have been exaggerated.