Illustration: Lindsey Bailey/Axios
Shareholders in Groq, a hot AI chipmaking startup, will receive handsome payouts from the company's $20 billion deal with Nvidia, even though no equity is changing hands, Axios has learned from sources close to the deal.
Why it matters: Social media has been full of questions about what the unusual arrangement means for Groq employees — both those heading to Nvidia and those staying put.
Catch up quick: Groq and Nvidia on Wednesday announced a "non-exclusive licensing agreement," with media reports accurately pegging the deal value at around $20 billion.
- The companies said that Groq CEO Jonathan Ross and president Sunny Madra would join Nvidia, while Groq would continue to operate as a standalone company led by new CEO Simon Edwards (who had been CFO).
- It's an unusual structure, but the latest in a recent spate of Big AI deals that seem designed to avoid tripping antitrust wires.
Behind the scenes: Most Groq shareholders will receive per-share distributions tied to the $20 billion valuation, according to sources.
- Around 85% will be paid up-front, while another 10% is paid midyear 2026 and the remainder at the end of 2026.
- Around 90% of Groq employees are said to be joining Nvidia, and they will be paid cash for all vested shares. Their unvested shares will be paid out at the $20 billion valuation, but via Nvidia stock that vests on a schedule.
- There are also around 50 members of that group whose entire stock packages are being accelerated and paid out in cash.
- Remaining Groq employees will also be paid for vested shares, plus will receive a package that includes economic participation in the ongoing company.
- Any Groq employee — staying or leaving — with the company for less than one year will have their vesting cliff dropped, so they can get some up-front liquidity.
By the numbers: Groq had raised around $3.3 billion in venture capital funding since its 2016 founding, including a $750 million infusion this past fall at nearly a $7 billion post-money valuation.
- Backers include Social Capital, Disruptive, BlackRock, Neuberger Berman, Deutsche Telekom Capital Partners, Samsung, 1789 Capital, Cisco, D1, Cleo Capital, Altimeter, Firestreak Ventures, Conversion Capital and Modi Venture.
- The company has never done a secondary tender for either employees or investors.
The bottom line: Everyone gets paid. A lot.