TheCorporateCounsel.net

One of the things that’s differentiated the AI boom from the dotcom extravaganza of the 1990s is the fact that most of what’s been going on in AI has been taking place in large, well-established public companies like NVIDIA. So far, we haven’t seen startup AI players try to tap the public capital markets through IPOs, but CoreWeave’s recent Form S-1 filing suggests that may be about to change.

CoreWeave is a cloud-computing company based in Livingston, New Jersey, that specializes in providing cloud-based graphics processing unit (GPU) infrastructure to artificial intelligence developers (okay, so I lifted that verbatim from Wikipedia – it’s a lot less fizzy than what’s in the S-1 and I can almost understand it). Anyway, the company is one of the fastest growing AI cloud infrastructure providers, and over the past three years, its revenue has risen from less than $16 million to nearly $2 billion. CoreWeave’s losses have grown even more impressively over that period, rising from $31 million in 2022 to $937 million in 2024 – which, with apologies to Gilbert & Sullivan, makes it the very model of a modern IPO candidate.

Staggering losses aside, this IPO filing is a lot less silly than what we’re accustomed to seeing from the previous generation of Unicorns. There’s no goofy mission statement or founder’s letter or unintentionally hilarious (see 2nd blog) related party transactions disclosure. Instead, as befits something new under the sun, the prospectus kicks off with four pages of “Selected Definitions” designed to acquaint investors with the jargon-rich world of AI cloud computing and includes nearly 60 pages of “Risk Factors.”  While most of what’s in the Risk Factors section is pretty much what you’d expect, this one on negative publicity caught my eye because of the way they hit the whole “hypothetical risk factor” issue head on in the language I’ve highlighted below:

If negative publicity arises with respect to us, our employees, our third-party suppliers, service providers, or our partners, our business, operating results, financial condition, and future prospects could be adversely affected, regardless of whether the negative publicity is true.

Negative publicity about our company or our platform, solutions, or services, even if inaccurate or untrue, could adversely affect our reputation and the confidence in our platform, solutions, or services, which could harm our business, operating results, financial condition, and future prospects. Harm to our reputation can also arise from many other sources, including employee misconduct, which we have experienced in the past, and misconduct by our partners, consultants, suppliers, and outsourced service providers. Additionally, negative publicity with respect to our partners or service providers could also affect our business, operating results, financial condition, and future prospects to the extent that we rely on these partners or if our customers or prospective customers associate our company with these partners.

Another thing about the offering that’s worth noting – it doesn’t look like multi-class structures are going the way of the Dodo anytime soon.  CoreWeave has Class A, Class B, and Class C shares, and another high-profile IPO filing from last week, StubHub, has Class A & Class B shares.  Finally, these filings include a bit of good news for embattled Delaware – both of these companies are incorporated there.

– John Jenkins