Naveen Rao just fired the opening shot in Silicon Valley's next big chip war. The former Databricks AI chief is raising $1 billion at a $5 billion valuation for Unconventional Inc., a stealth startup building what he calls a 'new substrate for intelligence' designed to take on Nvidia's AI chip dominance. With Andreessen Horowitz leading and heavyweights like Lightspeed and Lux backing the play, this marks one of 2025's most ambitious AI hardware bets.
The AI chip wars just got their most credentialed challenger yet. Naveen Rao, the mastermind behind Databricks' AI strategy, is betting $1 billion that he can crack the code Nvidia has dominated for years. His new startup, Unconventional Inc., is already in advanced talks for what would be one of the largest AI hardware funding rounds in history.
Andreessen Horowitz has agreed to lead the massive investment, with Lightspeed Venture Partners and Lux Capital joining the round, according to four sources familiar with the discussions. The deal values Unconventional at $5 billion before it's even shipped a single chip - a valuation that signals just how desperate investors are for viable alternatives to Nvidia's stranglehold on AI computing.
Rao isn't waiting around either. Sources tell us he's already raised hundreds of millions and plans to start building without the full $1 billion closing. The rest will come through a tranched approach - allowing him to hit development milestones while maintaining that sky-high valuation. It's a smart play in today's cautious funding environment.
The timing couldn't be more perfect. Nvidia's H100 chips remain backordered for months, creating opening after opening for competitors. But Rao isn't just building another GPU competitor - he's rethinking the entire computing stack. 'Rethinking the foundations of a computer to build a new substrate for intelligence that is as efficient as biology,' he posted on X last week, confirming Unconventional's existence. 'Brain Scale Efficiency without the biological baggage!'
This isn't Rao's first rodeo challenging tech giants. Databricks acquired his previous startup MosaicML for $1.3 billion just two years ago, after the company proved it could train large language models more efficiently than competitors. Before that, Intel snapped up his machine learning platform Nervana Systems for over $400 million in 2016.
The pattern is clear - Rao spots inefficiencies in how the industry approaches AI computing, builds a better mousetrap, then gets acquired by companies desperate to catch up. This time feels different though. With now valued at $100 billion and generating $4 billion in annual recurring revenue, Rao had a front-row seat to see just how much companies are willing to pay for AI infrastructure that actually works.
