CScale exits stealth with $145m to stop laser failures stalling AI

CScale, a Palo Alto startup building optical interconnect for AI data centres, has come out of stealth with $145m in Series C funding. The round takes its total funding to $188m, the company said in a statement on Wednesday.

Atreides Management led the round, with Valor Equity Partners and Premji Invest as co-leads. Sutter Hill Ventures, which has backed CScale since it started, and Maverick Silicon also took part. Nvidia and Intel Capital joined as its first strategic investors.

“We’re designing the interconnect for continuity. Lasers will fail. Compute shouldn’t,” chief executive Martin Lund said.

What CScale builds

Optical interconnect is what lets thousands of accelerators work together like one much larger computer. CScale says those links become essential once a single AI system spans dozens of racks. It is building an integrated light engine for that job.

Its pitch is reliability. CScale says it is designing the interconnect to contain optical failures without interrupting compute.

“Every optical failure is a compute failure,” said Gavin Baker, managing partner and chief investment officer at Atreides.

The money will go on developing the technology and bringing it to market, the company said.

Who runs it

Lund built Broadcom’s switching business and held senior roles at Microsoft and Cadence. Most recently he ran Cisco’s Common Hardware Group, which covers silicon, hardware systems and optics.

Founder and chief technology officer Sanjai Kohli co-founded SiRF, which brought GPS to the mass market. He later founded Inovi, which Facebook bought in 2014. CScale was founded in 2023 and has about 85 employees.

CScale joins a run of big rounds for startups that wire AI chips together. Atreides also backed Lumilens, which raised $700m in August. Celero raised $275m this month, and Eliyan took a $145m Series C in July. Nvidia has also been betting on photonics.