Upscale AI Aims for $2B Value in New Funding

Santa Clara-based Upscale AI, which focuses on AI networking infrastructure, is in discussions to raise $180M–$200M at a $2 billion valuation, marking its third round in under seven months.

Upscale AI, the artificial intelligence startup focused on building infrastructure to connect AI computing clusters, is in talks to raise a new funding round at a valuation of approximately $2 billion, according to people familiar with the matter. Notably, the company has had discussions to bring in between $180 million and $200 million in the deal.

If successful, this would mark a significant milestone not just for the company itself, but also for how fast capital is moving into the AI infrastructure space in 2026.

The Santa Clara-based company, founded by Barun Kar and Rajiv Khemani, has already raised more than $300 million since it launched. It raised more than $100 million in seed funding in September 2025, then secured a $200 million Series A on January 21, 2026.

Furthermore, the Series A was oversubscribed and led by Tiger Global, Premji Invest, and Xora Innovation with participation from Maverick Silicon, StepStone Group, Mayfield, Prosperity7 Ventures, Intel Capital, and Qualcomm Ventures. That oversubscription alone signaled strong investor conviction at a very early stage.

As a result of that round, the company crossed a unicorn valuation, just months after its $100 million seed round. Now, the potential new round would push that valuation to double the unicorn threshold.

The founding team is one of the key reasons investors have moved so quickly.

Upscale AI was co-founded by serial entrepreneurs Barun Kar, who serves as CEO, and Rajiv Khemani, who serves as Executive Chairman. Together, they bring a strong history of success, having co-founded and led ventures such as Palo Alto Networks, Innovium, and Cavium the latter of which was acquired by Marvell.

Moreover, the company’s team includes over 100 technologists with experience at Marvell, Broadcom, Intel, Cisco, AWS, Microsoft, Google, Palo Alto Networks, and Juniper Networks. In other words, this is not a team building an AI company for the first time they have done it repeatedly, at scale, across multiple technology cycles.

Beyond the funding headlines, it’s worth understanding what the company is technically working on.

Upscale AI says it is building networking infrastructure for AI compute clusters, with its SkyHammer architecture designed for scale-up AI networking. The company says its system is built on open standards including ESUN, Ultra Accelerator Link, Ultra Ethernet, SONiC, and SAI and it participates in the Ultra Accelerator Link Consortium, the Ultra Ethernet Consortium, the Open Compute Project, and the SONiC Foundation.

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In terms of product timelines, the SkyHammer chip, which will be manufactured by TSMC, is slated to become available in the fourth quarter of 2026. Interestingly, though, Upscale AI has yet to release a product as of this writing it is betting on a full-stack solution and open standards as the future of scalable AI infrastructure.

That means investors are, for now, backing a vision, a team, and a technology roadmap rather than a revenue-generating product.

It is also worth placing this story in the broader context of where venture capital is flowing right now.

The talks come at a frenzied moment for AI infrastructure investing. While consumer-facing AI companies face ongoing questions about monetisation and moats, infrastructure providers the companies building the rails, tools, and platforms that power AI applications are commanding premium valuations from VCs betting on the sector’s long-term growth.

Additionally, Upscale AI specialises in high-performance, open-standard networking solutions designed to power massive AI workloads and it is positioning itself as a challenger to incumbents like Nvidia, Cisco, and Broadcom. That is a bold ambition, but one that has clearly resonated with some of the world’s most prominent technology investors.

This latest round would be Upscale AI’s third institutional fundraising effort since launching just seven months ago a pace that mirrors the trajectory of other AI infrastructure companies like CoreWeave and Together AI, which raised billions at relatively early stages.

Consequently, if the round closes at the reported $2 billion mark, Upscale AI would join an exclusive club of AI infrastructure unicorns that reached ten-figure valuations in record time. That said, the company has not publicly confirmed the fundraising talks, and terms could change before any deal is finalised.

Disclaimer: This news is based on publicly available information. NervNow has not independently verified any claims.

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