The Deal in a Nutshell: $6 Billion for Technology and $1 Billion in the Business
According to information based on a letter that Poolside sent to its investors and that was cited by media outlets (including the WSJ), Nvidia has struck a $6 billion deal with the startup Poolside. Under the agreement, the graphics accelerator maker obtains a license to the technologies that Poolside used to build large language models. In addition to the license, Nvidia has offered jobs to 109 of the startup's employees and committed to investing $1 billion in the remaining part of Poolside's business, whose market value was estimated at $12 billion. Nvidia's strategic goal in this project is to create an open AI model capable of competing with Chinese counterparts.
Not an Acquisition, but a License: How the Structure Works
A key condition, emphasized in the letter to investors, is that Nvidia's license is non-exclusive, and the three founders of Poolside will retain their positions at the company. The document states outright that the deal "is not an acquisition" and does not fall under transactions carried out to bolster the staff with talented engineers (so-called acquihires). The funds received from Nvidia are planned to be distributed among Poolside's investors by the end of next year. Because the license is non-exclusive, Poolside retains the right to grant access to its Model Factory system — the tool the startup uses to build neural networks — to other developers as well.
Context: Groq and Enfabrica
The Poolside deal is not an isolated case. Nvidia has already concluded similar arrangements under the same scheme: the tech giant buys a license to use the technologies, hires the employees, but does not fully acquire the company, which continues to exist. In May of this year, media reported that Nvidia paid $20 billion to Groq for the right to use its AI technologies and hired its leading engineers; Groq remained independent and raised $650 million in investment, and by the current month closed a funding round of $350 million at a valuation of $3.5 billion. According to a source, a $900 million agreement was signed with the startup Enfabrica under the same scheme. This approach allows large technology companies to gain access to valuable talent and cutting-edge technologies without a full acquisition, and also to avoid scrutiny by industry regulators that could follow a complete purchase.
Contradictory Data
The sources contain several inconsistencies that are important to keep in mind. First, the letter's text and the description of the scheme cite different numbers of such deals: on the one hand, it is stated that Nvidia "has already concluded two deals under this scheme" (before Poolside), while on the other, it says that "in each of the three cases" the graphics accelerator maker obtained non-exclusive licenses. This is consistent if Poolside is counted as the third deal, but the wording in the primary materials differs. Second, there is tension in the very characterization of the deal: on the one hand, the letter insists that this is "not an acquisition" and not an acquihire, while on the other, Nvidia is poaching 109 employees out of a total headcount of fewer than 115, which is functionally very close to poaching nearly the entire team. Earlier, one of Poolside's executives stated that fewer than 70 people worked directly on creating the company's AI model. Finally, the $20 billion figure for the Groq deal rests on May media reports rather than direct confirmation by the parties, which distinguishes it from the current Poolside deal, detailed in the letter to investors.
Strategic Goal: Open AI Against China
The main stated outcome of the deal, according to Nvidia, is the creation of an open AI model that is to compete with Chinese counterparts. Poolside started as a developer of an AI agent for generating software code, then moved into the data center space, and later released an open AI model built on Nvidia accelerators. It is precisely this trajectory and the accumulated Model Factory technology that make the startup an attractive target for licensing: Nvidia gains access to an advanced software stack without buying the entire company.
What's Next for Poolside
In the letter to investors, Poolside's management describes the financial context in which the company found itself: "For the past three and a half years we have been moving in the right direction in a race where capital requirements were growing rapidly. At the end of last year we had a six-week window to raise the $2 billion needed to pay for a cluster of 40,000 GB300 accelerators, which was supposed to come online in January. We didn't make it in time and the cluster went to someone else." The letter also notes that the company could have used a cluster of 10,000–20,000 accelerators to build a model capable of competing with leading solutions. Now, having received $6 billion for the license and $1 billion in investment, Poolside intends to distribute the funds among its investors by the end of next year, while maintaining its independence and non-exclusive access to its technologies.
