Nebius, a publicly traded European AI infrastructure company formerly known as Yandex NV, has raised $700 million to fuel its expansion in the United States.
Nebius CEO Arkady Volozh (pictured above) told TechCrunch in a press conference today that the funding comes from “dozens of very well-known investors.” The names of all investors will be disclosed in filings with the Securities and Exchange Commission (SEC), but the company has so far only disclosed its existing partners, including GPU giant Nvidia and Silicon Valley’s There are only three companies: venture capital firm Accel and asset management company Orbis. .
The private placement will see Nevius issue 33.3 million Class A shares at a price of $21, representing a 3% premium to the company’s average share price since trading resumed in October.
The financing comes about six weeks after Nevius resumed trading on the Nasdaq after a nearly three-year hiatus imposed by sanctions against Russia-linked companies. The Netherlands-based company, which was the holding company for Yandex, the “Russian Google,” has plans to offer “full stack” infrastructure to AI companies in July after an extensive sale process. He emerged as Nevius.
In addition to its core cloud infrastructure business, Nebius also operates several additional businesses, including Avride, a Texas-based self-driving car company. A generative AI and LLM company called Toloka, based in the Netherlands. and TripleTen, an edtech platform based in Wyoming.
capital intensive plans
Nebius is expanding its footprint by taking a hybrid approach that combines colocation facilities (shared data centers) with proprietary “greenfield” sites built from the ground up. However, this will cost a lot of money, so we are currently seeking additional funding.
While Nebius competes with the usual cloud hyperscalers, it’s also up against deep-pocketed private players like CoreWeave, which also counts Nvidia as an investor. Notably, CoreWeave is in the midst of an expansion from the US to Europe, while Nebius is moving in the opposite direction, recently announcing plans to install a new GPU cluster at the same location in Kansas City. Nebius has also added a Paris colocation site to its list and plans to triple the capacity of its flagship data center in Finland.
Nevius already had about $2.2 billion in banks after dumping Russian assets earlier this year. But some of it was locked away in a share buyback program in case existing investors wanted to exit. After all, Nebius in 2024 will be a completely different business than the Yandex NV entity these investors previously backed. The offer was to repurchase up to 81 million Class A shares at up to $10.50 per share.
However, in the six weeks since re-entering the public markets, Nevius’ stock price has hovered around $21 (give or take), giving existing shareholders ample opportunity to sell for much more than the buyback price. It means that there was. Therefore, Nevius said, the proposal is “no longer justified” and would free up more capital for the company as it expands its data center footprint.
The downside to all this is that Nebius will need around $3 billion in construction capital. This number is still relatively low in terms of the funds required to build large-scale infrastructure. That’s why the company is already looking to raise more capital, whether it’s equity or debt, Volosh said.
“Of course, we have some income, but we need more capital to build faster,” Volosh said. “It’s very capital intensive. Technology and capital are the two components of this business. I’m not worried about the technology (side) and I think we can raise the capital.”
Also note that this new financial position means that Nebius has revised its financial forecast and now expects annualized run rate (ARR) to reach $750 million to $1 billion by the end of 2025. worth it. The company previously predicted that figure to be between $500. One million dollars and one billion dollars.
As part of the transaction, Accel partner Matt Weigand will join Nevius’ board of directors, initially only in observer status until formally elected at the company’s annual general meeting in 2025. .
