Specialized cloud provider CoreWeave has raised $2.3 billion in a debt facility led by Magnetar Capital and Blackstone (BX.N) and collateralized by Nvidia chips, with the funds to be used to expand to meet rising AI workload, the company said on Thursday. CoreWeave is a specialist in accelerating compute-intensive AI workloads with its GPU-powered servers, and the latest round of funding will be used to boost its capacity for machine learning, data processing, visual effects rendering, and pixel streaming.

The new financing, which comes on top of a Series B funding round in 2023 that saw the startup raise $221 million at a valuation of over $2 billion, will be used to acquire additional graphics processing units (GPUs), invest in data centers, and hire staff. The NYC-based startup has recently announced a $1.6 billion data center in Plano, Texas, and says it plans to open another two US-based centers this year, with 14 across the country by the end of 2023.

Unlike tech giants such as Microsoft and Amazon, which are developing their chips to power AI computing, CoreWeave has forged a strategic relationship with Nvidia, which gives the startup access to its latest high-performance data center GPU technology early. This has allowed the company to deliver a specialized service to firms such as generative AI startup OpenAI, Stable Diffusion art-generating AI, and others that require large numbers of nearly identical computing tasks to be executed in parallel.

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The unusual use of Nvidia H100, the sought-after chip that powers AI computing, as collateral for the loan, highlights investors’ value in the hardware and the growing demand for AI services as the world embraces automation and digitization. The financing is also a sign of a resurgent market for private asset-backed lending, where investment managers seek to lower risk by borrowing against hard assets such as data centers and server farms rather than stocks and bonds.

The deal will help CoreWeave compete with larger cloud providers such as Amazon and Microsoft, which are building their AI-powered computing infrastructure and partnering with GPU suppliers to access their hardware. CoreWeave CEO Mike Intrator told VentureBeat that the startup’s focus on purpose-built, specialized infrastructure lets it outperform its rivals in more specialized use cases such as generative AI.

Intrator added that the CoreWeave platform is already being used by clients ranging from banks to insurance companies to medical professionals and that the new funding will be used to increase the availability of the service in new markets. He said he expects the firm’s revenue to triple in 2024 and will double again by 2025. The company is not currently profitable.