AI chip startup Tenstorrent Inc., after attracting takeover interest earlier this year, has raised $1.5 billion from investors in a funding round that boosts its valuation to $6.2 billion, according to a statement provided to Bloomberg News.

Trace Capital, a firm started this year by Quiet Capital co-founder Ben Mahdavi, led the Series E financing, alongside Innovation X, Tenstorrent said in the statement.

The round also included participation by Agostinelli Group, Sandisk Corp. and Tether Investments, among others including T. Rowe Price Group Inc. and Cadence Ventures, the corporate venture arm of Cadence Design Systems Inc. Existing investors such as Ark Invest and Fidelity also participated.

Tenstorrent, which designs chips that it says are more efficient at running certain artificial intelligence workloads, had held conversations this year with industry players including Intel Corp. and Qualcomm Inc. about a potential takeover deal while also courting investors for a funding round, Bloomberg News previously reported.

The company’s valuation has more than doubled from 2024, when it was worth $2.6 billion in its previous funding round.

Tenstorrent is trying to make inroads competing in what’s become an increasingly crowded field of startups aiming to carve out a slice of the hundreds of billions being spent on AI infrastructure. Like much larger rivals Nvidia Corp. and Advanced Micro Devices Inc., Tenstorrent is offering more than just individual components. Its products also include computers and software.

Its chief executive officer, Jim Keller is one of the chip industry’s most prominent engineers and has been part of programs that have delivered successful products at several companies, including AMD and Apple Inc. He has also worked for Intel Corp. and Tesla Inc.

Tenstorrent was founded by AMD alumni Ljubisa Bajic, Milos Trajkovic and Ivan Hamer in 2016. Bajic worked with Keller at AMD.

The company ultimately decided to raise money instead of selling, Keller said in an interview. He said Tenstorrent did a demonstration in May that showed its Galaxy servers could run high-performance AI models from DeepSeek, which was a turning point for the company.

“Once we had the ability to fundraise and demonstrate the performance and started to ship, the investor interest came in,” Keller said. “Many of our investors and I personally think there’s an opportunity to grow quite a bit. I think that’s the best return for the investor and the employees.”Nvidia, AMD and Broadcom Inc. are the major producers of chips used to create and run AI software, but startups have cropped up trying to challenge them.

“People are looking for alternatives,” Keller said, adding that Tenstorrent can also compete by offering lower prices. General-purpose AI computers that can run any kind of model are in demand by customers, he said.

Tenstorrent’s customer base is diverse and the company can help fulfill orders that might be too small for its bigger competitors, he said. The company has 1,150 employees and can customize software or hardware based on customer needs.

“People say, ‘How do you grow to be a $10 billion business?’ Well, you start with $10 million and $100 million, then $500 million,” Keller said. “Our mission is to grow organically and meet the customers where they are and figure out how to service them.”