Earlier this year, the AI startup Fireworks AI wanted to rent hundreds of millions of dollars' worth of AI compute.
Rather than buying massive clusters of Nvidia's AI chips, known as GPUs, or renting from cloud giants like Amazon or Microsoft, some startups like Fireworks turn to specialized AI cloud providers — called neoclouds — for faster access to GPUs, more competitive pricing, and infrastructure specifically tailored to AI. Fireworks chose the neocloud GMI Cloud.
There was a catch: To serve Fireworks, GMI first needed to buy the Nvidia GPU systems from a hardware manufacturer — and banks wouldn't provide the financing because Fireworks wasn't an investment-grade company.
GMI founder and CEO Alex Yeh said they brought the problem to Nvidia and began discussing a new financing model around the beginning of this year. Yeh described it as an "insurance product" in which Nvidia agrees to step in if one of GMI's customers stops paying. In exchange, GMI shares a portion of its revenue with Nvidia.
GMI told Business Insider it is committing $500 million to expand its AI infrastructure under this new financing model and said it's among the first neoclouds in Asia to employ it.
The arrangement helps neoclouds secure loans they might not otherwise receive, while enabling Nvidia to bring more of its GPUs to market. Yeh said that rising memory prices also factor into the model's economics.
Fireworks announced this month that it had raised $1.5 billion at a $17.5 billion valuation. Still, Yeh said banks have so far viewed frontier AI startups as non-investment-grade — though he added that the market is changing quickly.
Nvidia can expand its customer base
Other neoclouds, such as Firmus and Sharon AI, are among the first to work with Nvidia under the new business model the chipmaker announced in July.
Sharon cofounder and CEO James Manning said the arrangement marks an evolution in its relationship with Nvidia from a traditional supplier to a longer-term partner.
David Nicholson, chief technology advisor at The Futurum Group, said the strategy helps Nvidia broaden its customer base beyond top cloud providers — many of which are developing their own competing AI chips.
Brad Gastwirth, global head of research and market intelligence at Circular Technology, called the model smart, though he said it could be a "yellow flag" for investors, with the key question being how selectively Nvidia chooses which neoclouds to support to limit its financial risk.
Nvidia has previously been criticized for 'circular financing'
The arrangement echoes Nvidia's intertwined relationships with companies like CoreWeave and OpenAI, in which it is both an investor and a supplier.
Arman Aleksanian, cofounder and CEO of the neocloud Eleveight AI — which is not in Nvidia's new financing program but is monitoring it — said critiques about "circular financing" were fair to consider, but only if the financing supports GPU purchases that aren't backed by actual demand.
"What I'd say is that circular financing is only dangerous when it manufactures demand that isn't actually there," he said. "If the capacity runs hot with real paying customers, then the financing did its job."
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Geoff Weiss is a senior reporter on Business Insider’s tech team, where he writes about AI startups and Y Combinator, the intersection of AI and the media industry, and workplace dynamics within top AI labs and chip companies.Previously, Geoff was on the media desk, covering YouTube and Netflix, and themes like the intersection of Hollywood and the creator economy. His work on Netflix’s video podcasting ambitions and Mr Beast’s lessons for Hollywood won second and first prize, respectively, at the 2025 LA Press Club Awards.Prior to joining Business Insider, Geoff was the senior editor of Tubefilter and a staff writer at Entrepreneur. He graduated from New York University with a degree in English Literature.He can be reached at [email protected], on Signal @geoffweiss.25, and on LinkedIn. Have a tip? Use a personal email address and a nonwork device; here's our guide to sharing information securely.Selected stories:Nvidia crushed its quarter — and CEO Jensen Huang said in a leaked all-hands that 'the market did not appreciate it'Nvidia will foot the bill for Trump's new visa fees. Here's what CEO Jensen Huang told staff.Massive AI salaries and RTO are fueling a real estate boom in San Francisco: 'It's going to rain money'The AI talent wars are ricocheting across startups. Here's how they're competing with Big Tech.
