Latest news with #RainAI
Yahoo
24-05-2025
- Business
- Yahoo
Sam Altman's $150M AI Chip Bet Crashes: Rain AI Faces Sale As OpenAI, Nvidia, And Microsoft Circle The Wreckage
Rain AI, a San Francisco-based chip startup backed by OpenAI CEO Sam Altman, is exploring a sale after its ambitious $150 million Series B funding round failed to secure investors. Despite early backing from Altman in a $25 million seed round in 2022, Rain AI has struggled to convert technical ambition into scalable business outcomes. The company, which aimed to rival industry giants like Nvidia (NASDAQ:NVDA) with its energy-efficient chips, is now in discussions with potential buyers, including OpenAI, according to New York Post. Don't Miss: Hasbro, MGM, and Skechers trust this AI marketing firm — 'Scrolling To UBI' — Deloitte's #1 fastest-growing software company allows users to earn money on their phones. Wired reports that Rain AI aimed to develop neuromorphic chips designed to process AI workloads more efficiently by mimicking how the human brain functions. According to Wired, the company hoped these chips would deliver better performance at a fraction of the power consumption compared to traditional graphics processing units, making them ideal for generative AI models. According to the Post, testing showed promising results, but the company failed to secure major commercial contracts or letters of intent, a problem that hampered investor confidence. One source close to the company told the Post that the founders were talented engineers but lacked the sales acumen to close enterprise deals. Trending: Maker of the $60,000 foldable home has 3 factory buildings, 600+ houses built, and big plans to solve housing — Rain AI's co-founder, Jack Kendall, acknowledged to stakeholders that the company was rapidly depleting its cash reserves and urgently required a $3 million bridge fund to sustain operations while negotiating a potential acquisition. The Post says that the company has since secured the emergency funding and entered what was described as 'good progress' in acquisition talks with multiple interested parties. These talks involve several high-profile technology firms that view Rain AI's hardware as a strategic foothold in the increasingly competitive chip market. While the company had originally planned to launch its Series B round in December, the raise was delayed repeatedly due to leadership instability and difficulty closing large institutional checks, the Post reports. The company also hired former Apple (NASDAQ:AAPL) veteran Jean-Didier Allegrucci to lead chip development efforts, bringing experience from Apple's custom silicon division, the Post Passo, Rain AI's co-founder and original CEO, stepped down citing personal reasons, and Kendall has since taken over as CEO, the Post reports. Rain AI is now in discussions with multiple technology giants about a potential acquisition. OpenAI, which has begun interviewing Rain employees to assess talent fit, is a top contender. Altman had previously pitched OpenAI investors to support Rain AI's Series B, aiming for a $600 million valuation, according to the Post. Rain AI's uncertain future unfolds against a backdrop of aggressive expansion in the AI hardware ecosystem. The Post reports that Nvidia, Elon Musk's xAI, Microsoft (NASDAQ:MSFT), and BlackRock (NYSE:BLK) are among the giants investing more than $30 billion to build the next generation of AI infrastructure. Rain AI may not have achieved its original vision, but its core technology and its team remain valuable assets for any player looking to gain ground in the competitive AI chip race. Read Next:Deloitte's fastest-growing software company partners with Amazon, Walmart & Target – Image: Shutterstock UNLOCKED: 5 NEW TRADES EVERY WEEK. Click now to get top trade ideas daily, plus unlimited access to cutting-edge tools and strategies to gain an edge in the markets. Get the latest stock analysis from Benzinga? APPLE (AAPL): Free Stock Analysis Report TESLA (TSLA): Free Stock Analysis Report This article Sam Altman's $150M AI Chip Bet Crashes: Rain AI Faces Sale As OpenAI, Nvidia, And Microsoft Circle The Wreckage originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved.
Time of India
18-05-2025
- Business
- Time of India
Chip startup Rain AI backed by Sam Altman up for sale after funding round flops
San Francisco-based chipmaker Rain AI , once a promising startup backed by OpenAI CEO Sam Altman , is exploring a sale after its $150 million Series B fundraising round collapsed, the New York Post reports. Sources familiar with the matter told the Post that OpenAI is among the suitors circling the company, which develops energy-efficient chips designed to outperform industry leader Nvidia . In acquisition talks for weeks, with no offer as yet Rain AI has been in acquisition talks for weeks, with no formal offer yet from OpenAI, according to the Post. Altman, a key investor in Rain AI's $25 million seed round in 2022, is reportedly looking to salvage his investment. 'Sam Altman is looking to bail out his investment by having OpenAI acquire Rain for pennies,' a source close to the situation told the Post. Took loan to stay afloat The startup has faced significant challenges, including the quiet departure of co-founder and CEO Will Passo, who stepped down for personal reasons, the Post reports. Co-founder Jack Kendall has taken over as CEO, as confirmed on Rain AI's website. In an email obtained by the Post, Kendall acknowledged the company's struggle to secure Series B funding to compete with giants like Nvidia, prompting a pivot to finding a buyer. Rain AI has been burning through cash and recently secured a $3 million bridge loan to stay afloat during sale negotiations, a source told the Post. 'They are in active conversations with suitors,' the source said, noting that major tech companies vying for a foothold in the chip industry are involved. However, Rain AI's inability to secure contracts or letters of intent has hindered its progress, despite successful chip testing. 'It is not a great business,' a source told the Post. 'They couldn't get real accounts.' OpenAI interviewing Rain AI employees The Post also reported that OpenAI has begun interviewing Rain AI employees to determine which ones to retain in a potential takeover. Rain AI's struggles stem partly from its young founders' lack of industry credentials, with one source telling the Post, 'It appears the founders are good engineers and poor salesmen.' Rain AI's Series B, initially slated for last December and expected to value the company at $600 million, was repeatedly delayed, the Post noted. Altman had personally pitched OpenAI investors to back the round, as the Post exclusively reported in November. Despite hiring Apple veteran Jean-Didier Allegrucci last year to bolster its chip development, Rain AI has struggled to translate its technology into sales. Neither OpenAI nor Rain AI responded to the Post's requests for comment. AI Masterclass for Students. Upskill Young Ones Today!– Join Now
New York Post
15-05-2025
- Business
- New York Post
Sam Altman-backed chipmaking startup Rain AI explores sale after $150M fundraising flops: sources
An upstart chipmaker backed by Sam Altman is exploring a sale after plans to raise $150 million from private investors fell through – and OpenAI is among the suitors, The Post has learned. Rain AI — a San Francisco-based startup that says it's developing chips that are more powerful and energy-efficient than those currently being sold by giants like Nvidia — has been in talks to be acquired for several weeks, sources said. It's unclear whether OpenAI has yet extended a formal offer for Rain AI, but one source said Altman — who was a major investor in Rain AI's $25 million seed round in 2022 — is circling after the Series B fundraising round collapsed. Advertisement 5 Sam Altman was an early investor in Rain AI. AFP via Getty Images 'Sam Altman is looking to bail out his investment by having OpenAI acquire Rain for pennies,' a source close to the situation told The Post. Co-founder Will Passo has quietly stepped down as Rain AI's CEO and has been replaced by fellow cofounder Jack Kendall, who is now listed as CEO on the company's website. In an email from earlier this month obtained by The Post, Kendall confirmed that it had proven difficult for the company to close a Series B that would allow it to compete with industry giants like Nvidia and that, instead, Rain had pivoted to a search for a buyer. Advertisement Kendall said Rain was burning through cash and would need to raise a $3 million bridge fund to keep the lights on until a deal was finalized. A private placement source said Rain AI has secured the bridge loan and has been 'making good progress in sales talks.' 'They are in active conversations with suitors,' the source said. 'These are major, major technological companies that are looking to compete in the chip space.' That's after Rain's Series B round, originally expected to launch last December, had been postponed several times. Advertisement 5 Will Passo recently stepped down as Rain AI's CEO. William Passo / LinkedIn Kendall said Passo had stepped down for personal reasons and that his exit had impacted the firm's ability to raise its Series B. OpenAI has begun interviewing Rain AI employees as it assesses which ones to keep in a potential takeover, one of the sources said. 'It appears the founders are good engineers and poor salesmen,' a second source said. 'They were very young and Silicon Valley outsiders without academic or industry credentials. This has always kept them at a disadvantage.' Rain 'has been very successful in the testing of the chips' but has struggled to turn its advanced tech into actual sales, the private placement source said. Advertisement 'The old CEO made some great hires but it is not a great business,' the source added. 'They couldn't get real accounts. They don't have contracts or letters of intent.' 5 Rain AI cofounder Jack Kendall has taken over as CEO. Representatives for OpenAI and Rain AI did not return multiple requests for comment. As The Post exclusively reported in November, Altman had been personally pitching OpenAI investors on backing Rain AI in the Series B round, which would have valued the startup at roughly $600 million. Last year, Rain AI hired Apple veteran Jean-Didier Allegrucci, who helped the Big Tech giant develop its own computer chips to replace Intel hardware in its iPhones and Macs. 'Our novel compute-in-memory technology will help unlock the true potential of today's generative AI models, and get us one step closer to running the fastest, cheapest, and most advanced AI models anywhere,' Passo said in a statement at the time. 5 Rain AI makes advanced computer chips. The turmoil at Rain AI comes during a period of fierce competition in the AI sector as OpenAI looks to fend off rivals like Elon Musk's xAI and Google. Advertisement OpenAI recently abandoned plans to become a for-profit entity after facing fierce public pushback from the attorneys general of California and Delaware. Instead, the company will remain governed by a non-profit entity. Altman's firm is also locked in a legal battle with Musk, who had sued to block the for-profit move and has argued OpenAI abandoned its original mission of building safe AI for humanity's betterment. OpenAI has argued that Musk is simply trying to slow down its progress. 5 OpenAI is one of multiple suitors for Rain AI. REUTERS In March, Nvidia and xAI joined a group that includes Microsoft, investment fund MGX and BlackRock to expand AI infrastructure in the US. Advertisement The group collectively plans to invest more than $30 billion in AI-related projects. Last December, Nvidia also joined xAI's $6 billion funding round as a strategic investor.
