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Chamath Palihapitiya's Early Groq Bet Pays Off Big in Nvidia's $20.6 Billion Deal

MarketDash Editorial Team
8 hours ago
Chamath Palihapitiya's Social Capital invested $62.3 million in Groq starting in 2017, securing nearly a third of the AI chip startup. With Nvidia acquiring Groq for $20.6 billion, the SPAC King is poised for a massive windfall that could significantly boost his $1.2 billion net worth.

Sometimes the best investments are the ones you make when nobody's paying attention. Chamath Palihapitiya is about to find out just how true that is, thanks to Nvidia Corp. (NVDA)'s $20.6 billion acquisition of Groq, the AI chip company that Social Capital bet on way back in 2017.

Getting In Early, Staying In Long

Palihapitiya's Social Capital was one of Groq's earliest believers, putting $10 million into the company in 2017 when it was still operating in stealth mode. The firm doubled down the following year with another $52.3 million, which gave Social Capital close to one-third ownership of the hardware startup. That's not just writing a check—that's conviction.

Beyond the capital, Palihapitiya served on Groq's board from the very beginning until stepping down in 2021. The company went on to raise several additional funding rounds, most recently securing $750 million at a $6.9 billion valuation earlier this year. By that point, Groq had attracted some serious names: BlackRock Inc. (BLK), Neuberger Berman, Samsung Electronics Co. (SSNLF), Disruptive, and Cisco Systems (CSCO).

Yes, those later funding rounds diluted Social Capital's stake. But even with dilution, an early bet that turns into a $20.6 billion exit is the kind of math that makes venture capitalists very happy. And here's the kicker: Social Capital now operates primarily as Palihapitiya's family office and is closed to outside investors. That means he stands to capture the bulk of the windfall himself, which could significantly expand his estimated $1.2 billion net worth, according to Forbes.

The Original Vision: $100 Billion by 2045

On Thursday, Palihapitiya took to X to reflect on his early journey with Groq, even sharing the first investment memo he wrote about the company. In that memo, he predicted a valuation of $100 billion by 2045. He added "Possibly," because even the most confident investors hedge a little.

He noted that the company, "as with all important companies," endured its own "trials and tribulations." That included the decision to promote Jonathan Ross, the company's founder, from CTO to CEO and "the inevitable falling out and repair" of their relationship. "It all happened for a reason," Palihapitiya wrote.

How the Deal Works

Under the terms of the acquisition, Nvidia will enter into a non-exclusive licensing agreement with Groq to access the latter's inference technology. Groq's founder Jonathan Ross and President Sunny Madra, along with other team members, will join Nvidia to help advance the licensing of this technology.

Groq has long been a prized asset for Palihapitiya. Just last year, he dismissed two partners at Social Capital after they attempted to raise outside capital for the company's latest funding round through a special purpose vehicle, according to Bloomberg. That's how much he valued keeping control of this particular investment.

The company did not immediately respond to requests for comment on the specifics of Social Capital's current ownership stake or the financial windfall from the deal.

Back to Stock Market News

Chamath Palihapitiya's Early Groq Bet Pays Off Big in Nvidia's $20.6 Billion Deal

MarketDash Editorial Team
8 hours ago
Chamath Palihapitiya's Social Capital invested $62.3 million in Groq starting in 2017, securing nearly a third of the AI chip startup. With Nvidia acquiring Groq for $20.6 billion, the SPAC King is poised for a massive windfall that could significantly boost his $1.2 billion net worth.

Sometimes the best investments are the ones you make when nobody's paying attention. Chamath Palihapitiya is about to find out just how true that is, thanks to Nvidia Corp. (NVDA)'s $20.6 billion acquisition of Groq, the AI chip company that Social Capital bet on way back in 2017.

Getting In Early, Staying In Long

Palihapitiya's Social Capital was one of Groq's earliest believers, putting $10 million into the company in 2017 when it was still operating in stealth mode. The firm doubled down the following year with another $52.3 million, which gave Social Capital close to one-third ownership of the hardware startup. That's not just writing a check—that's conviction.

Beyond the capital, Palihapitiya served on Groq's board from the very beginning until stepping down in 2021. The company went on to raise several additional funding rounds, most recently securing $750 million at a $6.9 billion valuation earlier this year. By that point, Groq had attracted some serious names: BlackRock Inc. (BLK), Neuberger Berman, Samsung Electronics Co. (SSNLF), Disruptive, and Cisco Systems (CSCO).

Yes, those later funding rounds diluted Social Capital's stake. But even with dilution, an early bet that turns into a $20.6 billion exit is the kind of math that makes venture capitalists very happy. And here's the kicker: Social Capital now operates primarily as Palihapitiya's family office and is closed to outside investors. That means he stands to capture the bulk of the windfall himself, which could significantly expand his estimated $1.2 billion net worth, according to Forbes.

The Original Vision: $100 Billion by 2045

On Thursday, Palihapitiya took to X to reflect on his early journey with Groq, even sharing the first investment memo he wrote about the company. In that memo, he predicted a valuation of $100 billion by 2045. He added "Possibly," because even the most confident investors hedge a little.

He noted that the company, "as with all important companies," endured its own "trials and tribulations." That included the decision to promote Jonathan Ross, the company's founder, from CTO to CEO and "the inevitable falling out and repair" of their relationship. "It all happened for a reason," Palihapitiya wrote.

How the Deal Works

Under the terms of the acquisition, Nvidia will enter into a non-exclusive licensing agreement with Groq to access the latter's inference technology. Groq's founder Jonathan Ross and President Sunny Madra, along with other team members, will join Nvidia to help advance the licensing of this technology.

Groq has long been a prized asset for Palihapitiya. Just last year, he dismissed two partners at Social Capital after they attempted to raise outside capital for the company's latest funding round through a special purpose vehicle, according to Bloomberg. That's how much he valued keeping control of this particular investment.

The company did not immediately respond to requests for comment on the specifics of Social Capital's current ownership stake or the financial windfall from the deal.