AI Startups Borrow Billions to Acquire Nvidia GPUs Amid Rising Compute Costs

AI startups are turning to venture debt to fund rising infrastructure costs and maintain high early-stage valuations. Crusoe Energy Systems raised a $750 million credit facility from Brookfield Asset Management to expand data centers and acquire Nvidia GPUs. AI and machine learning startups accounted for over a third of the $30 billion deployed in venture debt in the US and Europe.

In a move to manage rising infrastructure costs and maintain high early-stage valuations, AI startups are increasingly turning to venture debt. According to a recent article [3], AI and machine learning startups accounted for over a third of the $30 billion deployed in venture debt in the US and Europe. This trend is evident in the case of Crusoe Energy Systems, which recently raised a $750 million credit facility from Brookfield Asset Management to expand data centers and acquire Nvidia GPUs [3].

The venture debt market has become a crucial source of funding for startups in the AI sector. Venture debt provides a flexible financing option that allows companies to access capital without diluting their equity. This is particularly beneficial for AI startups, which often require substantial investments in data centers, cloud infrastructure, and specialized hardware like Nvidia GPUs to develop and deploy their models.

The trend is also driven by the need to maintain high valuations. As AI startups continue to attract significant investments, maintaining a high valuation is essential for future fundraising rounds and potential exits. Venture debt allows startups to manage their capital structure in a way that supports their growth while keeping their equity intact.

While venture debt offers numerous benefits, it also comes with risks. Startups must carefully manage their debt obligations to avoid defaulting on their loans. Additionally, the interest rates on venture debt can be higher than traditional debt instruments, which can add to the overall cost of capital.

In conclusion, AI startups are leveraging venture debt to fund infrastructure costs and maintain high valuations. This trend reflects the growing demand for capital in the AI sector and the need for startups to manage their capital structures effectively. As the AI industry continues to evolve, the use of venture debt is likely to remain a significant financing option for startups seeking to scale their operations.

References:
[1] https://www.business-standard.com/technology/tech-news/funders-commit-usd-1b-toward-developing-ai-tools-for-frontline-workers-125071701063_1.html
[2] https://finance.yahoo.com/news/elon-musks-spacex-commits-2-193137087.html
[3] https://www.pymnts.com/news/artificial-intelligence/2025/this-week-in-ai-ai-startups-hit-fundraising-gold/