Cerebras Systems generated billions of dollars in value during its IPO debut on Thursday, rewarding founders, employees, and early investors after nearly a decade of development challenges. One of the largest beneficiaries was venture capital firm Benchmark, which backed the AI chipmaker in its earliest days despite initial hesitation from partner Eric Vishria.
Benchmark currently owns 9.5% of Cerebras. Vishria, who joined the company’s board in 2016 after co-leading its $25 million Series A funding round, told TechCrunch that he almost skipped the company’s original pitch meeting because Benchmark rarely invests in hardware startups.
At the time, Vishria had been a venture capitalist for roughly 18 months. Before joining Benchmark, he co-founded social browser startup RockMelt, which Yahoo acquired in 2013 for a reported $60 million to $70 million.
“It was five founders and a deck, and it was our first hardware investment in 10 years,” Vishria said.
Benchmark’s investment approach is known for being highly selective, particularly in hardware. Vishria said he questioned why he agreed to the meeting and even messaged his assistant during the presentation to ask why it had been scheduled.
The Pitch That Changed Vishria’s Mind
According to Vishria, his skepticism quickly disappeared during the early part of Cerebras CEO Andrew Feldman’s presentation.
“The first slide is the title slide. The second slide is the team,” Vishria recalled. “And I was like, ‘Oh, that team is really good.’”
The turning point came on the third slide, when Feldman argued that graphics processing units, or GPUs, were not fundamentally designed for deep learning workloads.
“GPUs actually suck for deep learning. They just happen to be 100 times better than CPUs,” Feldman said during the pitch, according to Vishria.
Vishria said the statement immediately changed how he viewed AI hardware.
“I was like, ‘Oh, my God, of course. Like, why would a graphics processor be the right thing for AI?’” he said.
The meeting took place before Google published its Transformer research paper in 2017, which later became a foundation for modern generative AI systems such as ChatGPT.
Cerebras was pitching an unconventional approach centered on giant AI-focused chips that the semiconductor manufacturing industry was not yet equipped to produce at scale.
Although intrigued, Vishria admitted he lacked hardware expertise. Other Benchmark partners reportedly shared the same concern and advised him to involve Benchmark co-founder Bruce Dunlevie, who had more experience with semiconductor investments.
Vishria arranged another meeting where Feldman pitched directly to Dunlevie. The Benchmark founder questioned Feldman extensively about chip packaging, cooling systems, and engineering requirements.
“Most of that meeting was like a dog watching TV for me,” Vishria joked, referring to his own understanding of the technical discussion.
Dunlevie reportedly warned that many hardware startups attempting similar projects had failed. He believed the team had a chance to succeed but questioned whether there would be enough market demand for the product.
Vishria ultimately concluded that if Cerebras could significantly improve AI performance speed, customers would eventually emerge.
The founders also had a previous track record. Feldman and other members of the team previously sold server startup SeaMicro to AMD.
“The advantage of having had a successful exit previously is it erases some of the uncertainty in the venture capitalists’ minds,” Feldman told TechCrunch.
Years Of Technical And Financial Challenges
What followed, according to the report, was more than eight years of engineering and fundraising difficulties.
Feldman and Cerebras co-founder and CTO Sean Lie had to develop new cooling methods capable of handling chips drawing unusually large amounts of power. The company also created custom machinery designed to drill 40 screws into wafers simultaneously without damaging them.
During the process, Vishria repeatedly questioned whether the project would succeed.
“What are we doing?” he recalled thinking.
The company also faced significant financial pressure because hardware development required large amounts of capital long before products generated meaningful revenue.
Cerebras eventually raised roughly half a billion dollars from investors while its chips were still under development. It later needed additional funding during the difficult 2022 venture capital downturn.
“You don’t have a lot of traction on the company yet, so yeah, that was where it got really tough,” Vishria said.
Inference Demand Changed Cerebras’ Position
According to Vishria, conditions shifted dramatically around 18 months ago.
Cerebras’ chips, manufactured by Taiwan Semiconductor Manufacturing Company (TSMC), proved highly effective not only for AI training but also for inference workloads, where AI systems generate responses after training is completed.
At the same time, demand for AI inference infrastructure accelerated across the industry.
The company secured major customers and began generating meaningful revenue. Rather than raising another private funding round, Cerebras pursued a public offering in 2024.
The IPO process initially faced delays due to U.S. government scrutiny involving national security concerns tied to Abu Dhabi-based cloud provider G42, which was at the time the company’s largest customer and investor.
Public market investors also raised concerns about Cerebras’ dependence on G42 and the company’s financial losses.
According to the report, the delay ultimately benefited Cerebras because it allowed the company to diversify its customer base. OpenAI and Amazon Web Services later became major customers as well.
Cerebras also reportedly doubled revenue and achieved profitability last year.
Vishria credited the company’s leadership and engineering teams for adapting through multiple challenges.
“Persistence, ingenuity, but also adaptiveness,” he said.
Benchmark’s Investment Turns Into Multi-Billion-Dollar Stake
Benchmark owned 17,602,983 Cerebras shares at the IPO opening price of $185 per share, valuing the stake at roughly $3.3 billion.
The value increased to more than $5.3 billion based on the company’s first-day trading price above $300, though Benchmark remains restricted from selling shares during the standard six-month post-IPO lockup period.
According to company disclosures and comments from Vishria, Benchmark spent approximately $18 million acquiring about 80% of its shares during early funding rounds. The firm later invested an additional roughly $250 million during later financing rounds.
In total, Benchmark invested an estimated $270 million for a stake now worth several billion dollars, depending on how Cerebras’ stock price performs after its public debut.
When asked about the assistant who approved the original meeting he nearly skipped, Vishria laughed.
“I think she’ll do well, very well,” he said.
Featured image credits: Magnific.com
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