Etched, the AI chip startup founded by three Harvard dropouts in 2022, has closed a $300 million Series C funding round at a $10.3 billion valuation, co-founder and COO Robert Wachen tells TechCrunch.  

The round was led by Sequoia, with Andreessen Horowitz, SK Hynix, Jane Street, and Diffusion Capital also participating, along with other, earlier investors. Other backers of the company include names like Peter Thiel, Andrej Karpathy, Dylan Field, Amjad Masad, and more. 

Etched was previously valued at $5 billion in December when it raised a $500 million round, meaning it has doubled its valuation in about seven months. The company says this is the highest valuation ever for a Sequoia-led Series C. Last month, Etched announced that it had successfully manufactured its homegrown chips, that its first full systems were being tested by clients, and it had already booked $1 billion worth of orders. 

Etched launched at a time when the idea of building a chip specifically for AI models based on transformer technology (the architecture behind most modern AI systems, including ChatGPT and Claude) was considered wild if not wacky. The company is still battling the perception that its products — which are sold as full systems, not just chips — involve chips designed to run only specific LLMs.  

That’s not the case, Wachen explains. The systems can run any AI model, including Mixture of Experts models like DeepSeek and Qwen — an architecture that splits tasks across specialized sub-models rather than relying on one large model — as well as non-transformer designs like Mamba, which is built on a different underlying architecture known as a state-space model. (Interestingly, the idea of etching parts of a specific AI model directly into silicon to boost performance isn’t considered far-fetched anymore. Google is reportedly pursuing the same concept with its Frozen v2 chip for Gemini.)

Still, Etched’s claim to fame today is that it designed two new components from scratch to speed up inference — the computing process that happens after a user submits a prompt.  

“Inference is built in two stages,” Wachen says, “prefill and decode.” The “prefill phase” involves understanding the prompt, including context. It’s mathematically and compute-intensive. The “decode” phase generates the output tokens (the actual answer the user sees). It requires less computation but needs massive amounts of memory. 

Etched created a prefill chip that operates “dramatically” faster, he promises, “by running at a much lower voltage than any other AI chip. We call this low-voltage inference.” Lower voltage generates less heat, which allows the chip to pack in more transistors.  

For the decode process, Etched created a new type of memory and “interconnect technology that we call cluster scale memory. It allows many chips to connect together and use a shared memory pool at a very, very fast, low latency,” he says. The result, Etched promises, is high speeds but lower costs.

Because the startup was launched before most of the tech world (besides Nvidia) understood AI’s specialized compute needs, the founders, CEO Gavin Uberti, Wachen and CTO Chris Zhu, have faced plenty of skeptics who kept doubting even after announcing the company announced that its first batch of silicon had been successfully manufactured by TSMC.

Much of that comes from how few people have had access to the systems. So far, access has been limited to investors and early customers. In fact, that’s how Etched landed its list of famous investors in the first place — by showing them private demos in its office.

“Andrej Karpathy from Anthropic, Noam Brown from OpenAI, Geoffrey Hinton, as well as all the investors in the funding round — these are all people who actually tried the hardware and are very excited about it,” Wachen says.  

Still, it’s been a long, difficult road with more to go until the rack systems are mass produced and delivered. The trio famously dropped out of Harvard to launch Etched, not knowing then how to raise cash (much less the loads of it they would need) or how to hire. 

“We had no idea how hard it was going to be,” he said. “I think we still have to be humbled by what it will take to actually get to scale.” 

Wachen remembers landing in the Bay Area after telling his parents he was leaving school to do a startup, with no office or apartment arranged. He slept on the floor of a friend’s unfurnished house. 

“I remember staying in my friend’s house that they were about to sell, using a towel as a blanket,” he laughs. The founders eventually set up the servers they needed to run the chip-design tools in the garage of an early employee and “every time it needed to be rebooted, he would call his wife, and she would go and hit the reboot button.” 

Today, there are 400 people bustling in an office, and Etched operates a 2 megawatt data center. “We’re running tokens in our in our lab today, working with some of the largest AI companies in the world,” he says. 

Wachen also has a blanket now, and a mattress “and a pillow even. Multiple pillows,” he jokes.  

More importantly, he and his co-founders never let the doubters stop them. “It’s come a long way. It’s a very, very different world. But I think, when you really think something’s possible, and you just work at it for a long time, you can do it.”