Cerebras IPO delivers multi-billion dollar win for Benchmark

The Cerebras Systems IPO was a financial success, generating billions of dollars for the company, its founders, and its major investors. Among the big winners is Benchmark, which holds a 9.5% ownership stake in the company, representing 17,602,983 shares.

A breakdown of Benchmark’s investment shows:

• Initial share purchase: Benchmark acquired about 80% of its shares in early rounds for around $18 million.
• Later share purchases: The firm bought the remaining shares in later rounds for around $250 million, as disclosed in Cerebras’ S-1 (an SEC filing for public offering).
• Total estimated cost: Benchmark spent maybe $270 million for its total stake.
• IPO value: The shares were worth $3.3 billion at the IPO opening price, and over $5.3 billion if the first day trading price holds.

This multi-billion dollar outcome almost did not happen. Eric Vishria, a general partner at Benchmark and Cerebras board member since the company was founded in 2016, was initially hesitant to take the first meeting with the startup. “It was five founders and a deck, and it was our first hardware investment in 10 years,” said Vishria. Prior to becoming a venture capitalist, Vishria had sold the startup RockMelt to Yahoo in 2013 for a reported $60 million to $70 million.

Despite his initial reluctance, Vishria co-led Cerebras’ $25 million Series A (early stage funding round). He was won over during the pitch when co-founder and CEO Andrew Feldman explained that Graphics Processing Units (GPUs) were suboptimal for deep learning, and only happened to be 100 times better than Central Processing Units (CPUs). This pitch occurred years before the publication of Google’s Transformer paper (foundational 2017 AI research) which eventually paved the way for modern AI.

Building the hardware required years of development. Feldman and co-founder Sean Lie had to invent new cooling methods to prevent the giant-sized chip from burning, and TSMC (a contract chip manufacturer) manufactured the processors. The team’s previous experience selling their startup, SeaMicro, to AMD helped reassure investors during difficult periods, including the 2022 VC bear market.

The path to the public market also faced regulatory hurdles. In 2024, Cerebras attempted to go public but faced U.S. government scrutiny over national security concerns. This delay was triggered by a large investment from G42, an Abu Dhabi-based cloud provider that was Cerebras’ major customer. Since then, the chipmaker has diversified its customer base, securing large customers including OpenAI and AWS.

Why it matters

The Cerebras IPO generated billions for its investors, including Benchmark, and marks a significant milestone for the AI chipmaker after years of development and regulatory scrutiny.