Investors, including Nvidia Corp. (NASDAQ:NVDA), have invested about $27 million in the networking software startup Arrcus Inc. in the latest round of funding to enhance its platform for managing data traffic more efficiently.
The investment round saw participation from Saudi Aramco's venture arm Prosperity7 Ventures, Hitachi Ventures, and General Catalyst, among others, Bloomberg reports.
The San Jose-based company, which counts SoftBank Corp (OTC:SFTBY) and Target Corp (NYSE:TGT) among its 50 clients, intends to use the funds to expand globally and enhance its technology.
With the rise of artificial intelligence, the demand for robust networks connecting enterprises, data centers, and users has increased.
Arrcus's software optimizes data flow to meet this demand.
CEO Shekar Ayyar emphasized the growing importance of networks in the evolution of AI architecture, stating that companies are seeking smarter ways to utilize processors and hardware efficiently.
Nvidia, which has become the posterchild of the AI revolution, is not only catering to the rising demand for its advanced chips but has also become a venture capital investor in firms leveraging the technology.
The chip major has invested in about three dozen startups, with investments in other companies rising sharply from $300 million a year ago to $1.55 billion at end-January.
For example, Nvidia-backed AI startup Cohere is eyeing a $5 billion valuation, marking a substantial leap from its previous valuation of $2.2 billion.
Cohere's competitors include OpenAI, which has Microsoft Corp (NASDAQ:MSFT) as a backer and anticipates $1 billion in revenue for 2024.
Arrcus collaborates with major industry players such as Broadcom Corp (NASDAQ:AVGO) and Intel Corp (NASDAQ:INTC) alongside Nvidia.
The startup employs approximately 150 people, with a significant portion based in Bangalore. Earlier in 2023, Arrcus raised $50 million, later expanding its Series D funding round.
NVIDIA stock has gained more than 153% in the last 12 months. Investors can gain exposure to the stock via T-Rex 2X Long NVIDIA Daily Target ETF (BATS:NVDD) and ProShares Ultra Semiconductors (NYSE:USD).
Price Action: NVDA shares are trading higher by 2.41% at $120.83 at the last check on Thursday.