Nscale, an AI data center builder, raises $3.36 billion ahead of an IPO.

Nscale Ltd. announced today that it has secured $3.36 billion in funding to support its data center construction expansion. The capital will arrive in two tranches: $2.26 billion from a consortium including Third Point, Apollo, Citadel and more than a dozen other institutional investors, with Nvidia Corp. providing the remaining $1 billion in mid-November.

Nscale is raising the capital through convertible notes—short-term debt instruments that investors can exchange for stock. These notes will convert into shares immediately following the company's forthcoming initial public offering, where Nscale reportedly hopes to raise $3 billion at a $35 billion valuation.

"This marks a milestone for Nscale as we continue scaling our full-stack AI infrastructure to meet unprecedented global demand," said founder and Chief Executive Officer Josh Payne. "With the backing of these world-class investors, we are strongly positioned to accelerate our data center buildouts globally."

The company's pitch to investors centers on more than $103 billion in total contracted value—a metric forecasting future revenue from data centers. Nscale expects most of that revenue from contracts with Microsoft Corp. and Anthropic PBC.

Nscale operates with a vertically integrated approach, designing and constructing not only the facilities themselves but also supporting power infrastructure. In West Virginia, the company is building an AI campus with an on-site microgrid capable of generating 2 gigawatts of power when it comes online in early 2028. The facility will also include energy storage infrastructure to offset potential fluctuations in the microgrid's capacity, and according to Nscale, the campus will draw no electricity from the public grid.

Beyond West Virginia, Nscale's network includes 16 other sites. The company owns five campuses outright while the remainder are operated by partners. According to its IPO prospectus, Nscale's construction strategy prioritizes locations where electricity prices are "approximately 70% lower than major U.S. power markets."

Custom software development is another major focus. Last month, Nscale detailed an AI tool it has built to automatically troubleshoot issues in its graphics card clusters, identifying which specific parts require repair when server recovery necessitates physical intervention. In June, the company acquired Anyscale Inc. for $1.65 billion to enhance its software capabilities—a platform designed to improve the efficiency and reliability of AI clusters. Nscale may use proceeds from this investment to fund additional acquisitions.