As the artificial intelligence (AI) boom has swept round the world over the past two years, the space has largely been dominated by US technology businesses. In London, however, growth at an entrepreneurial UK AI company has also been gathering pace. Today, NexGen Cloud will announce it has raised $45 million of new funding, valuing the company at just over $350 million.
NexGen was founded in 2020, initially focusing on blockchain applications, but rapidly pivoting into cloud solutions for AI. The company’s revenues totalled only $3 million in 2023, the year after its shift of emphasis, but grew almost seven times’ last year to reach $20 million. “We deliver cloud in the way it’s meant to be delivered,” says Youlian Tzanev, one of NexGen’s co-founders and now its chief strategy officer.
In essence, NexGen gives its customers access to the computing power they need to perform tasks such as training and developing large language models for generative AI applications. The company rents space and power in established data centers, enabling customers to secure time on GPUs, the machines that are vital to powering AI.
Customers use NexGen’s Hyperstack platform as their way into this power. The cloud-based solution means they don’t have to build their own infrastructure to support their work with AI. “Enterprises are looking for a solution that is simple and easy to use,” adds Tzanev. “And as their AI projects develop and grow, they need something they can scale up quickly.”
Demand is growing rapidly. Data from SNS Insider suggests the market for GPU as a service was worth only $3.3 billion globally in 2023 but will be worth $34 billion by 2032 – growth of almost 30% a year.
Naturally, this acceleration has seen competitors target the market. The big names in cloud computing – including AWS, Microsoft and Google – are all present, but SNS Insider also points to a range of other players – including the likes of Vultr, Linode and Lambda Labs.
Nevertheless, NexGen is convinced it can carve out a space for itself. It points to the merit of building a European-native cloud AI business, given the growing regulation of the sector. Local providers may be better placed to cope with European regulation – both in the European Union and the UK – on data privacy and management, for example.
The business also sees partnerships as critical to expansion, pointing to alliances with firms such as cloud marketplace Shadeform. “NexGen has been an incredibly reliable partner as we’ve scaled our cloud marketplace,” says that company’s CEO, Ed Goode.
In time, NexGen hopes that customers using it for AI development will opt to host other data and activity via its cloud service. “If we can deliver the most complex cloud solutions successfully, we’ll be trusted to host other storage,” Tzanev explains.
Tzanev believes the cloud solutions market is on the verge of a significant change. “It’s been something of a monopolistic market, dominated by a handful of giant US technology companies,” he says. “There was a time when the feeling was that ‘no-one gets fired for hiring AWS, say’, but now people are exploring other options.”
Many enterprises are focused on usability and scalability, as well as price, Tzanev argues. He points to NexGen’s team of technical specialists, who provide troubleshooting advice and support on performance and optimisation, as one possible source of competitive advantage.
Certainly, the business appears to be getting traction with customers, particularly in Europe. Current clients include organisations such as Red Hat, Ingenix.AI, Tyne, and ArchiLabs. At the latter company, Brian Bakerman, CEO, says it switched to Hyperstack based on its “support and pricing”.
The company’s strategy for the next year and beyond focuses on developing partnerships that enhance access to and delivery of AI-compute services. It has plans for further improvements to its infrastructure services and for the launch of new products that make it easier for enterprises to integrate AI across the entire development cycle. One particular priority is dedicated virtual machines, giving customers greater control over privacy and data security.
Today’s fund-raising will help in this regard, giving NexGen greater balance-sheet strength and supporting its technology roll-out as it continues to add GPU capacity. The company’s Series A round gives it a post-raise valuation of $354 million, with the funding primarily sourced from family trusts and high-net-worth individuals, led by Moore & Moore Investment Group.
It’s an important raise, both for NexGen itself, and for UK technology companies, which have often struggled to raise scale-up finance. “Funding is tighter in Europe than in the US, with liquidity in short supply,” says Tzanev. “The upside of that is that it forces us to keep proving ourselves.”
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