Benchmark, Eclipse Reap Billions in Returns From Cerebras IPO

Three of the first venture capital investors in Cerebras Systems Inc. are set to earn billions of dollars from their early bets on the chipmaker following its Wall Street debut on Thursday.

Benchmark will own roughly 8.1% of the outstanding shares in Cerebras after the initial public offering, according to a securities filing. At the $185-per-share IPO price for Cerebras, that stake was worth about $3.2 billion. That marks a 12-fold return for Benchmark, which invested a total of $268 million in Cerebras across multiple funding rounds, according to the firm.

Eclipse and Foundation Capital co-led the first funding round in Cerebras alongside Benchmark, when the startup was only valued at $60 million, including the investment. Eclipse’s 6.2% stake in the chipmaker was worth $2.5 billion at the IPO price, 17 times the $146.5 million it invested, according to the venture firm. Foundation’s 7% stake was worth $2.8 billion. (Fidelity, a later investor, has amassed the largest stake.)

Shares of Cerebras jumped 89% to open at $350 each on Thursday. At that price, the value of Eclipse’s stake had climbed to $5.2 billion, not accounting for any shares sold in the IPO. Benchmark’s stake was worth about $6 billion and Foundation’s was worth roughly $5.3 billion.

Cerebras, which competes with Nvidia Corp, made its long anticipated public market debut, seizing on investor appetite for all things artificial intelligence. The company’s IPO offers a rare and lucrative exit for venture firms as more startups stay private longer.

Cerebras also has a long list of notable individual backers, including OpenAI’s Sam Altman and Greg Brockman, as well as Intel Chief Executive Officer Lip-Bu Tan. But few stand to benefit as much as Benchmark, which previously made successful bets on Uber Technologies Inc. and eBay Inc.

When Benchmark first backed Cerebras in 2016, Nvidia was still valued in the billions and AI was far from top of mind to the general public. Cerebras also represented a departure of sorts for Benchmark, which had not made a hardware investment in a decade.

But Eric Vishria, then still a new general partner at Benchmark, was sold on Cerebras because of its focus on building a faster chip and the team’s ambition. “I understood very little past slide three or four of the whole pitch,” Vishria said in an interview this week. “It was just the five founders and a deck at that point.”