Graphcore has been acquired by SoftBank, following months of speculation about the future of the UK-based semiconductor startup.
The company, which makes chips for AI applications, will become a wholly owned subsidiary of the Japanese investment giant but will continue to operate under the Graphcore name.
The acquisition will see Graphcore “significantly” grow its team in the UK, said cofounder and CEO Nigel Toon on a media briefing yesterday.
The announcement confirms Sifted reporting earlier this week that a deal had been agreed.
While the financial details are undisclosed, sources told Sifted that only investors with preference shares would receive a payout as the sale price of the company is less than the total amount invested to date (nearly $700m).
Toon and cofounder and CTO Simon Knowles will stay on in their respectives roles and the company’s headquarters will remain in Bristol.
Investing in growth
The deal marks the end of a turbulent period for the once high-flying Graphcore. A landmark deal with Microsoft fell through in 2022 and the company has struggled to pick up commercial traction.
Investors have also written down shares in the company — which was valued at a peak of $2.8bn when it raised a $222m Series E in 2020 — over the past 18 months.
The “missing ingredient” for Graphcore has been “scale and level of investment”, said Toon.
“We’ve been successful in raising capital for the business — but the amount of capital we’ve had access to is tiny when compared to other major players in the space,” he told reporters. “We got to 500 people and we were competing against companies that had tens of thousands working on this stuff.”
Former employees previously told Sifted that the company made poor calls on commercial and tech strategy, while the AI market had moved in the wrong direction for the business.
But the acquisition gives Graphcore access to the kind of capital that has become “more challenging” to tap over the past two years, Toon told reporters. SoftBank could also help in terms of accessing big customers, he added — something that has proved a hurdle for Graphcore in the past.
SoftBank will “invest in and add to the [Graphcore] team in the UK,” Toon told reporters. Graphcore will also continue to operate offices in Cambridge, London, Gdansk in Poland and Hsinchu in Taiwan, he added.
The deal has been approved by the UK’s government after a national security review and the Competition Markets Authority (CMA), said Toon.
Who’s being paid?
While he said that reports that the sale price would be $500m were inaccurate — Graphcore did not comment when asked by Sifted whether the sum paid by SoftBank was less than the amount invested in the company.
The Graphcore CEO confirmed Sifted reporting that employees holding ordinary shares in the form of stock options or restricted stock units (RSUs) would receive nothing from the deal.
Toon said that he would be receiving a payout from the sale of Graphcore.
Holders of preference shares, according to Companies House filings, include investors like Molten Ventures, Atomico, Pitango and Sequoia.
SoftBank’s AI offensive
The Graphcore deal is the latest in a string of big money bets SoftBank has placed on the AI sector.
In the 12 months to June this year, the company stumped up $8.9bn on investments and commitments — double the previous year — as it stepped up its pursuit of AI winners.
In Europe, that’s seen it lead UK autonomous vehicle startup Wayve’s $1bn Series C, in what is Europe’s largest ever AI round.
It’s also been reported that SoftBank has been on the hunt for deals that could benefit UK chip designer Arm, which the Japanese company owns.
When asked whether Graphcore would be working on projects with Arm going forward, Toon said that the company would be “cooperating across the SoftBank family”.
Read the orginal article: https://sifted.eu/articles/graphcore-acquired-softbank-news/
