London-based AI startup Nscale is making headlines as it seeks to raise $2.7 billion to expand its AI infrastructure, with plans to establish global data centers utilizing Nvidia chips for AI model training and operations.

Nscale's CEO, Joshua Payne, highlighted the company's capability to manage all infrastructure layers to meet the demands of large-scale AI clients, emphasizing their access to necessary power for GPU superclusters.

European governments are increasingly encouraging private investments in AI infrastructure, with the UK securing £14 billion in commitments and France over €100 billion for similar projects.

The funding strategy includes a significant $1.8 billion private credit deal led by Goldman Sachs, alongside an additional $900 million sought in preferred equity and convertible shares.

The funds raised will be directed towards expanding Nscale's global data center footprint and deploying Nvidia chips for rental to ByteDance and other companies.

Nscale is part of a growing trend of European startups capitalizing on the AI boom, driven by rising demand for powerful computing resources, alongside other companies like Ori and Fluidstack.

Despite the growing interest in AI, an Nscale spokesperson refrained from commenting on fundraising speculation, emphasizing the company's strategic position as a European hyperscaler.

Recently, Nscale announced a 30MW expansion of its Glomfjord facility in Norway, bringing its total capacity there to 60MW, with plans to implement the latest generation of GPUs.

In addition to its funding efforts, Nscale is setting up a new 50MW data center in the UK, scheduled to go live later in 2025, further solidifying its position in the market.

The backdrop of Nscale's expansion efforts is complicated by US-China tensions, particularly regarding restrictions on AI chip imports for Chinese firms, which have led to increased local investment in AI infrastructure.

Founded less than a year ago, Nscale has already raised $155 million in a Series A funding round and $30 million in seed funding, demonstrating its rapid growth in the AI sector.

Nscale is exploring a partnership with ByteDance, which could potentially be worth $2 billion, although a ByteDance representative has stated that this figure is exaggerated.