Andromeda AI Inc., a startup that helps companies rent artificial intelligence infrastructure, has closed a new funding round at a $1.5 billion valuation.
Upstarts Media reported today that the capital was provided by Paradigm, a venture capital firm focused on the crypto sector and emerging technologies. The exact dollar value of the deal is unclear. Paradigm, which earlier backed a seed round for Andromeda, has reportedly invested a total of $60 million in the startup to date.
Many cloud providers offer access to instances equipped with graphics processing units. However, securing the most favorable pricing often requires signing multiyear contracts, which isn’t always practical for AI startups. For example, a software maker looking to train a small language model may only wish to rent a GPU cluster for a few days or weeks.
Andromeda operates a platform that makes it easier for companies to rent AI infrastructure. It provides access to unused graphics cards in the data centers of internet providers, cryptocurrency mine operators and various other organizations. Customers can rent that capacity on-demand without signing long-term contracts.
In theory, a startup could rent capacity from organizations that have unused GPUs without going through an intermediary. In practice, there are numerous administrative and technical factors that complicate the process. Andromeda manages those details for customers to streamline the GPU procurement workflow.
Before the company makes a GPU provider’s infrastructure available through its platform, it checks that the hardware meets performance and security requirements. Andromeda evaluates not only the provider’s graphics cards but also supporting equipment such as storage arrays. Malfunctioning flash drives and network issues can interrupt AI training runs.
Andromeda customers can purchase capacity from multiple providers through a single interface. According to the company, its platform consolidates hardware bills into a single invoice to simplify billing.
Andromeda offers its payment features alongside a tool called the Andromeda Pricing Index. According to the company, it provides data about the current going rate of different GPUs complete with region-specific price variations. Customers can use that information to negotiate more favorite prices from infrastructure providers.
AI clusters can encounter numerous technical issues during a training run. According to Andromeda, its engineers monitor the infrastructure offered through its platform for reliability issues and make adjustments when necessary.
The company offers access to infrastructure from more than 100 providers. It claims to have processed more than 1,000 GPU transactions since launching about two years ago.
Andromeda’s annualized revenue run rate reportedly grew from $50 million in 2024 to $100 million last year. It has operated profitably since launch. The company will use its new funding to grow its customer base, which reportedly includes multiple “notable AI startups and labs” that typically spend $250 million to $500 million per year on infrastructure.
Photo: Unsplash
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