NYSE Floor Talk: WEKA Officially Becomes A Unicorn!

Joining me today on NYSE Floor Talk is Jonathan Martin. He is the President at WEKA. Jonathan, fantastic to have you back. Thanks for joining me.

Awesome to be back! Seems like only a couple of months.

It was a couple of months.

So last time you visited me you had talked about WEKA’s expanded partnership with NVIDIA. So, what’s your news today?

We have some really, really exciting news! We are just announcing a milestone round of funding for WEKA that’s a Series E round of funding. It’s $140 million: $100 million in a primary and $40 million in secondary with a post money valuation of $1.6 billion.

Now WEKA has a $1.6 billion valuation, so you’re officially a unicorn. Congratulations!

We are officially a unicorn. Thank you.

We’re seeing a lot of AI startups netting huge valuations now. In comparison, your $1.6 billion valuation is moderate. Can you give us some context as to why?

Valuation to some degree is a personal preference, and over the last few years we’ve seen many companies in this space taking advantage of really gargantuan valuations and the challenge always with that is while it’s great for the founders, it’s great for the team, their secondaries, it’s a challenge because it’s sometimes hard to grow into those valuations. And, secondarily, if you’ve already got a very large valuation it’s very hard to attract top talent because there’s effectively no equity left in the company. So, we decided to take a much more moderate to aggressive approach I would say, which allows us to quite easily grow into the valuation, and secondarily keep attracting phenomenal talent for us. This is a marathon not a sprint, and this will be one of probably many so that’s how we ended up at $1.6 billion.

Who led the round?

The round was led by Valor. Valor is led by the CEO and chairman, Antonio Gracias, who you may know from his work that he’s done with SpaceX, Tesla, and X, and so he’s been involved in some of the most progressive AI companies on the planet. We’re very very pleased that Antonio is also going to be joining WEKA as a board member and bringing that phenomenal experience to our business to help us grow. In addition, we had a number of existing investors, so people like Generation Investment Management, NVIDIA, Atreides, 10D, Hitachi – who were part of our Series D round which we did in November 2022 – also join us as part of Series E.

So tell me more about the deal and what the funds will be used for.

We still have significant capital still available from both our Series C and our Series D round. We did our series D round in November 2022 literally the month before ChatGPT and generative exploded. This is a market that is evolving very, very quickly and so really we want optionality. As the market evolves, we want the ability to deploy capital quickly to take advantage of changes in that market. What we are seeing though is continued enormous appetite from the market for the WEKA data platform and so we want to be able to serve our customers in the best ways that we can and we’ll use the capital to do that.

Now, Jonathan, with tech giants like Microsoft, Meta, and Alphabet recently disclosing that they’ve spent more than $32 billion combined on data centers and other capital expenses in Q1, it’s clear that 2024 is shaping up to be the year of AI Infrastructure. What’s the downstream impact on the industry and what does it mean for a company like WEKA?

I think the good news for WEKA is plumbing is back. 2023 was all about ChatGPT and large language models. 2024 I think is really organizations readying themselves for the next chapter in this journey. Massive amounts of capital being deployed – as you said $32 billion in just three companies in three months – to build out a next generation of data center. These data centers are going to be significantly larger than anything we’ve experienced to date. They’re going to be packed with accelerated compute and platforms like WEKA, and they’re going to be built in a much greener, much more sustainable way than data centers have been built traditionally, and those data centers will really form the building blocks for the next decade or so of innovation in AI. For WEKA this is phenomenal. These are very, very large opportunities for us. They are organizations that are processing very, very large volumes of data very, very quickly which is right it the sweet spot of what we do.

So what’s next for WEKA, any plans to IPO?

We’re here talking about funding and IPO to us is another funding round. It’s obviously an important funding round. Funding is obviously important for growing businesses but what we’re really focused on, though, is building the next great data management company to come out of Silicon Valley that is going to be able to take advantage of this opportunity in AI and make all of our customers incredibly successful.

Alright, well, Jonathan, wonderful to have you back on Floor Talk. Thanks for joining me today.

Thank you so much.