Key points
- Bloomberg: CapitalG backs Celero at more than $3 billion
- Celero is developing chips to carry AI data between data centers
- Founders developed coherent chips at Inphi and Marvell
- The startup had raised $140 million through last November
Alphabet's (GOOGL) growth fund CapitalG is backing Celero Communications at a valuation above $3 billion, Bloomberg reported on Tuesday. Celero is a two-year-old startup. It is developing chips to move AI data over fiber between racks of accelerators and between nearby data centers.
The company had raised $140 million through last November, when CapitalG led a $100 million Series B. Celero had not announced the new round's size or terms by Tuesday afternoon.
What does Celero make?
A coherent digital signal processor, or DSP, is the chip at each end of a fiber-optic link that encodes data onto light and decodes it on the other side. The coherent approach packs more data into each wavelength than the simpler method used inside a data center. That's why telecom carriers have used it on long-distance lines for years. Celero says it is adapting it for the shorter links AI now needs. The cited company and investor announcements provide no performance benchmarks or customer names.
The problem it is chasing is size. An AI training cluster can outgrow one building, and the campuses that hold the next one are being built miles apart. Nariman Yousefi, Celero's co-founder and chief executive, said in the company's November funding release that "as AI models and clusters grow exponentially, today's data centers face severe limits in bandwidth, cost and energy efficiency." CapitalG's own write-up of the investment framed the choice as one between PAM4 chips, which it called cost-effective but limited at higher bandwidths, and telecom-grade coherent chips it called "over-engineered for the data center."
Who is behind it?
The founders previously developed coherent DSPs at the companies Celero now competes with. Yousefi was a senior vice president at Broadcom (AVGO) and chief executive of the DSP startup ClariPhy, according to CapitalG. He then ran the coherent DSP businesses at Inphi and at Marvell (MRVL) after Marvell bought Inphi. Co-founder and chief technology officer Oscar Agazzi led design work at ClariPhy, Inphi and Marvell. CapitalG said the team numbered about 100 engineers drawn largely from those companies. Celero is based in Irvine, California, with design centers in Canada and Argentina.
Earlier investors include Sutter Hill Ventures, which led the seed and Series A rounds, along with Valor Equity Partners, Atreides Management and Maverick Silicon.
Alphabet already buys networking and custom silicon from both incumbents. Marvell granted Google a warrant on 58.97 million shares as part of an August chip agreement, and Broadcom builds Google's TPU accelerators and reported $16.7 billion in AI revenue for its latest quarter. The optical networking trade has been one of the year's strongest. The logic is the one Celero is pitching. Larger AI clusters put more pressure on the links between chips and buildings.
As of 11:07 a.m. Eastern on Tuesday, Alphabet traded at $337.50, down 0.3%, Broadcom at $369.75, up 3.3%, and Marvell at $228.24, up 2.1%, according to Robinhood market data. Bloomberg published its report at 10 a.m. Eastern.
