Liquid AI secures $250M in Massachusetts’ largest fundraise of the year

Cambridge-based Liquid AI has secured major funding to compete with established players in the generative AI space.

Major funding secured: Liquid AI has raised $250 million in venture capital funding, led by Advanced Micro Devices (AMD), valuing the MIT spinoff at over $2 billion.

• The funding represents Massachusetts’ largest AI-related startup deal in 2024
• AMD has also signed on as a strategic partner, strengthening Liquid AI’s position in the market
• The deal follows a previous $37.5 million seed funding round in December, led by Boston Celtics co-owner Stephen Pagliuca and OSS Capital

Innovative technology approach: Liquid AI’s technology draws inspiration from the neural structure of C. elegans, a tiny roundworm with just 302 neurons, to create more efficient AI systems.

• The company’s solution promises similar capabilities to ChatGPT and Google’s Gemini while requiring significantly less computing power
• In October, the company demonstrated its technology running various AI tasks directly on mobile phones
• Applications included detecting suspicious financial transactions and generating AI-themed Halloween costume ideas

Strategic partnerships and leadership: The involvement of AMD represents a significant vote of confidence in Liquid AI’s approach to artificial intelligence.

• AMD CEO Lisa Su, an MIT graduate, has publicly endorsed Liquid AI’s unique approach to developing AI models
• The partnership could help AMD compete with Nvidia, which currently dominates the AI processor market
• MIT’s Computer Science and Artificial Intelligence Laboratory director Daniela Rus, a Liquid AI co-founder, emphasizes the company’s focus on private, on-device AI solutions

Market context and competition: The funding places Liquid AI in a strong position within Massachusetts’ growing tech ecosystem.

• The deal ranks as the eighth-largest venture capital funding in Massachusetts this year
• Battery developer Ascend Elements secured the largest state deal at $600 million
• AI music generator Suno previously held the top AI-specific funding spot with $125 million

Looking ahead: While Liquid AI’s biomimetic approach to artificial intelligence shows promise, the company faces significant challenges in scaling its technology and developing industry-specific applications to compete with well-established players like OpenAI and Google. The success of their efficient, on-device AI model could potentially reshape the landscape of AI deployment and accessibility.