Exclusive: Foundry comes out of stealth with a $350 million valuation

Jared Quincy Davis was inspired by AlphaGo. You know, the AI program that plays Go, the 2,500-year old Chinese strategy game?

“Part of the reason I started working in deep learning was I saw AlphaGo from DeepMind and I thought that technique, if extended to real world problems, can be pretty transformative,” Davis told me over a Zoom call. “But there are some limitations in that initial approach that made it not quite viable for problems at scale. So, I actively started working on filing those gaps.”

The result, ultimately, is the company Davis started building in 2022: Foundry, a cloud computing service provider focused on AI workloads. The company today launched out of stealth, having raised $80 million in total seed and Series A funding, Fortune has exclusively learned. The round was co-led by Lightspeed Venture Partners and Sequoia Capital, and other investors include Microsoft Ventures and Jeff Dean, Chief Scientist at Google DeepMind and Google Research.

Foundry is now valued at $350 million. And the company says it has more than eight figures in revenue, and its customers include LG, KKR, Stanford, MIT, and Carnegie Mellon University.

There’s a lot here, right? Foundry’s valuation has seemingly jumped substantially from where it reportedly was last year, at $50 million. As the AI boom booms, it feels like every conversation I have these days comes back to valuations in the space. On this point, folks seem to fall into two camps, Lightspeed partner Raviraj Jain told me.

“Either you fall into the camp of thinking this is the biggest shift of a lifetime, or you think about this from a more classical lens,” he said.

I confess to Jain, to Davis, and I suppose now to you, that I personally don’t feel fantastically comfortable with where AI valuations are at. Most seem ultimately really frothy to me. So, I ask both of them to make the case to me, as to why Foundry specifically is so geared to succeed.

“We’re on the fast track for this technology [AI] to be pretty ubiquitous…But it’s very compute-intensive to train these models and therefore we’re at a point where there’s a true bottleneck,” Jain tells me, adding that these compute services that Foundry is set up to provide aren’t exclusively the province of hyperscalers like AWS, making room for companies like Foundry.

Ultimately, Jain sees Foundry as one of those much-discussed “picks and shovels” businesses, because everyone is going to need compute, and the market will expand as compute capabilities are increasingly democratized.

“It is the biggest technological shift of our lifetimes—and a lot of the stacking order of that is going to be in the early winners,” he said. “And if you can be in the ‘picks and shovels business’ for a market that massive, the next Googles will be made in the next few years.”

To Davis, the compute concerns that Foundry is solving for are the “rare mix of technically rich and compelling, and near-term, economically viable."

So, I don’t know, but what I can tell you is this: The demo was fast, Foundry does seem pretty picks and shovels-esque, and having covered large cloud providers like AWS, I don’t think they’re beyond disruption. Then there’s Davis himself, who seems ready for a roller coaster. He’s a first-time founder, and this was his first time speaking on-the-record about Foundry—but I walked away feeling like I had a clear sense of how Davis thinks.

"I have a deterministic and optimistic perspective on the world, which is: I don't think things will kind of just evolve their own way,” he told me. “I think that we can actually shape how things evolve."

And so, Davis was inspired by AlphaGo. Now, the main objective of the game Go is, more or less, to capture territory. Though Davis is playing some pretty tough opponents, I’d say the game is on.

It’s Reddit time…In just a few hours, Reddit will make its trading debut on the New York Stock Exchange. After Astera Labs’ 72% pop on Wednesday, all eyes are on Reddit as investors look for evidence that the IPO market is back.

See you tomorrow,

Allie Garfinkle
Twitter: @agarfinks
Email: alexandra.garfinkle@fortune.com
Submit a deal for the Term Sheet newsletter here.

Joe Abrams curated the deals section of today's newsletter.

This story was originally featured on Fortune.com