Astera Labs, a fabless chip startup, nabs $50M at a $950M valuation to remove bottlenecks in high-bandwidth cloud applications

As more enterprises migrate to cloud-based architectures, they are also taking on more applications (because they can) and, as a result of that, more complex workloads and storage needs. Machine learning and other artificial intelligence applications add even more complexity. Now a startup that has built technology to make that process move faster and more efficiently is announcing a round of funding to address those enterprises’ evolving needs. Astera Labs, a fabless semiconductor company that builds connectivity solutions that help remove bottlenecks around high-bandwidth applications and help better allocate resources around enterprise data, has raised $50 million.

The Series C values the company at $950 million post-money, the company confirmed.

Fidelity Management and Research is leading the round with Atreides Management and Valor Equity Partners — two other new backers — also participating, and previous investors Avigdor Willenz Group, GlobalLink1 Capital, Intel Capital, Sutter Hill Ventures and VentureTech Alliance also participating.

Intel (which first invested in 2020) is a strategic backer in this case, meaning a financial investor and significant customer. Sanjay Gajendra, Astera’s chief business officer, notes that the chip giant is collaborating with the startup to develop PCI Express and CXL (Compute Express Link) technology and products to “increase bandwidth, performance, and resource availability in next generation server and storage infrastructure.” With AI use cases being a central part of Intel’s next-generation growth strategy, these will be essential for building AI-based systems based on Intel’s processors, he said, adding that Aries Smart Retimers for PCIe are also featured in multiple reference designs and commercial platforms from Intel.

Other partners and customers include TSMC, Wistron, Samsung Electronics and Western Digital.

Prior to this, Santa Clara-based Astera had previously only raised $35 million in three years, which speaks to its own efficiency as a business, and the fact that it’s been generating healthy revenues already.

“We are thrilled to join forces with Fidelity, Atreides, and Valor to cement our leadership position in intelligent cloud connectivity solutions and usher Astera Labs into the next growth phase of our company,” said Jitendra Mohan, CEO, Astera Labs, in a statement. “With this investment and increased collaboration with our manufacturing partners, we will rapidly scale our worldwide operations to satisfy incredible customer demand and launch multiple new product lines to solve the industry’s most pressing connectivity challenges.”

This latest funding round, more specifically, is also coming on the back of what has been a relatively strong period for the company in the wake of the COVID-19 pandemic, and the shift it precipitated in migrations to the cloud among organizations.

“With a step-function increase in folks working/studying from home and relying on cloud-based SaaS/PaaS applications, the deployment of scalable hardware infrastructure has accelerated,” Gajendra said in an email to TechCrunch. He claims that solutions could provide up to double the bandwidth on the same infrastructure. “This has driven our sales demand from the world’s largest cloud operators by an estimated 25% to 30%.” 

Astera’s fabless approach is giving the company a faster route to scaling its technology and selling it on to more providers at a time when we are very much caught in a race for more bandwidth but also a finite amount of cost and resource for simply adding more capacity: this means that companies that are building solutions to improve the efficiency of systems that are already in place will continue to get a lot of attention from the market, and investors. This is an issue that extends to different aspects of enterprise IT: for example, Firebolt is building architecture and algorithms to reduce the bandwidth needed specifically for handling big data analytics.

Avigdor Willenz is not only a founding investor in Astera Labs, but he was also one of the first to back other major processing startups, including Annapurna Labs (now owned by Amazon), Habana Labs (now owned by Intel) and many others. “Astera Labs has done a tremendous job in developing a portfolio of multiple innovative products that address critical needs of heterogeneous computing and composable disaggregation infrastructure,” said Willenz in a statement. For now, it looks like Astera is earmarked not as an exit but to stay the course to public company status, although the race for technology among the giants in the market may lead to a different outcome. “We are very pleased to see the strong execution track record and rapid value creation by Astera Labs, which has opened multiple options including an IPO in the future,” he continued.

“We are very excited with the growth and expansion of Astera Labs and remain highly optimistic about the long-term potential of the company,” added Stefan Dyckerhoff, MD at Sutter Hills Ventures and Board Member of Astera Labs.