Nscale raises $3.36B in pre-IPO convertible notes amid IPO filing

London-based AI cloud startup Nscale has raised $3.36 billion in convertible loan notes, led by Third Point, a move that automatically converts into equity upon its impending IPO. The financing was announced on September 25, 2026.

The size of the round is significant, coming shortly after the company’s IPO filing. The company’s filing earlier this month showed first-half revenue growing tenfold year-over-year, though losses also deepened as it invested in data centers and GPU capacity. The convertible structure may indicate an effort to manage dilution ahead of a public listing. How the market responds will depend on whether investors see the spending as a necessary bet on future growth or a sign of unsustainable burn.

Nscale’s recent moves have been substantial. Earlier this month, it allocated $3.5 billion in AI cloud infrastructure to humanoid robotics startup Figure, including 100,000 NVIDIA Vera Rubin GPUs. That commitment contrasts with smaller raises in the sector, such as TacnIQ.ai’s $1.5 million pre-seed round, highlighting Nscale’s focus on high-compute applications. The Figure deal suggests the company is targeting specialized workloads, though it remains unclear how this positions it relative to larger cloud providers.

Other players are also expanding in the AI cloud space. Verda, a renewable AI cloud provider, recently secured $155 million to grow its footprint, indicating competition in the market. Nscale’s decision to pursue a NYSE listing may reflect a strategic choice, though it will face scrutiny from investors used to different financial profiles in the cloud sector.

Nvidia’s role as a backer has been important for Nscale, but the startup’s heavy reliance on GPUs could expose it to shifts in the AI hardware market. The convertible notes provide near-term flexibility, but the long-term viability of its strategy will hinge on its ability to generate returns from its infrastructure investments.

For now, the funding signals confidence in Nscale’s vision. Whether that confidence is justified will depend on how effectively it can translate its spending into sustainable revenue.

Sources: unite.ai