Yotta Data Services Raises $150M for AI Infrastructure Expansion

Yotta Data Services, an Indian neocloud infrastructure provider, has successfully raised $150 million from non-institutional investors at a valuation of ₹37,000 Cr (approximately $3.9 billion). This funding round, with most transactions concluding by May, signifies a strategic pivot for the company as it aggressively expands its Artificial Intelligence (AI) computing capacity to meet escalating global demand.

The company is on track to significantly scale its AI cloud infrastructure, expecting to deploy over 40,000 NVIDIA Blackwell GPUs within the next four months and reaching approximately 85,000 GPUs by the end of the current financial year. Sunil Gupta, cofounder, managing director, and CEO of Yotta, highlighted that this expansion is primarily driven by international clients eager to secure substantial GPU capacity, often with billion-dollar contracts contingent on rapid delivery.

This international focus represents a notable shift from Yotta’s previous strategy. Until February, approximately 70% of its GPU resources were allocated to domestic AI initiatives, supporting Indian startups and institutions. However, Yotta has reoriented its capacity towards overseas markets where demand is stronger and pricing is reportedly 50% higher. This has led to a customer mix reversal, now standing at 75% international and 25% domestic, with projections to reach a 90:10 ratio by year-end.

The capital raise is part of a larger pre-IPO funding strategy, with Yotta targeting a total of $1.5 billion across its pre-IPO rounds and the upcoming Initial Public Offering (IPO). The company is preparing to file its Draft Red Herring Prospectus (DRHP) in the coming months. Gupta expressed confidence in the company’s valuation, noting a 30% increase since March due to securing larger customer contracts.

Yotta operates in a competitive landscape that includes players like Neysa, E2E Networks, NxtGen, CtrlS, and ESDS. ESDS is also preparing for its own ₹700 Cr IPO, indicating growing investor interest in the AI infrastructure sector within India.

Founded in 2019 by Sunil Gupta and Darshan Hiranandani as part of the Hiranandani Group, Yotta initially focused on hyperscale data centers and cloud infrastructure. Its significant growth phase began around 2023-24 with the procurement of a substantial number of NVIDIA GPUs. The company has also been a key contributor to the Indian government’s IndiaAI Mission, providing compute resources for its common facility.

Yotta anticipates its cumulative investment in AI infrastructure to surpass $7 billion by the end of FY27. To finance this expansion, the company is employing innovative financing models, including a GPU financing structure pioneered in mature markets. In partnership with entities like Gorilla, Yotta installs and operates GPUs owned by these partners, sharing revenue and retaining an option to buy back the hardware after a few years.

The company’s business model is diversified across colocation (20%), sovereign cloud and managed services (25-30%), and GPU-based AI infrastructure (approximately 50%). While colocation and sovereign cloud services are experiencing growth, the GPU business is rapidly outpacing them, driven by global contracts. Yotta expects AI infrastructure, particularly its GPU offerings, to dominate its revenue mix in the coming years, projecting colocation’s share to decrease to around 15%.

Furthermore, Yotta’s sovereign cloud offerings are garnering interest internationally, with governments in South Asia, CIS countries, and other regions exploring replication of these services. The company is in discussions for potential international partnerships, underscoring the critical role of domestic AI infrastructure in global sovereignty discussions.

The Indian IPO market has seen a robust pipeline, yet AI and AI infrastructure firms remain relatively underrepresented. Companies like E2E Networks and Fractal Analytics are among the few AI-focused entities that have gone public. Yotta’s potential IPO, alongside others in the sector, could significantly boost the visibility and investor confidence in India’s AI infrastructure capabilities, mirroring the trend seen in global markets where AI infrastructure companies have achieved substantial valuations.