Odd Lots9 Des 2024

How the Hedge Fund Magnetar Is Financing the AI Boom

AI software and the hardware that enables it have been hugely popular investments this year. But there have still been limiting factors on the sector, including a shortage of compute to power so many new start-ups. Investors don't want to finance companies that lack a signed contract for compute, and compute providers don't want to sign contracts for startups that haven't already secured funding. Now Magnetar, a hedge fund which started its first ever venture capital fund earlier this year, is trying to solve this "chicken and egg" problem by offering compute in exchange for equity. Magnetar was an early investor in the AI space, partnering with Coreweave and recently helping the hyperscaler to raise $7.5 billion. On this episode, we speak with Jim Prusko, partner and senior portfolio manager on Magnetar's alternative credit and fixed income team, about why the hedge fund is getting into venture capital and some of the new ways they're deploying money in the space.

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10 Sep 52min