Magnetar Closes New Generative AI Fund

Magnetar has closed its $235 million venture fund, Magnetar AI Ventures Fund LP (Fund AI), to invest in early-to-growth stage generative artificial intelligence (AI) companies.

Limited partners in the new fund include both institutional investors and strategic partners, with PEAK6 Strategic Capital and Apex Fintech Solutions serving as anchor investors.

Fund AI will target companies advancing generative AI across various stages of development, including the models that power AI systems, the infrastructure required to scale these systems, and practical applications.

The generative AI industry has experienced unprecedented growth over the past few years, driven by breakthroughs in machine learning algorithms and increased computational power. According to a report by McKinsey & Company, the AI industry could contribute up to $13 trillion to the global economy by 2030. Generative AI, in particular, is expected to see significant adoption across industries ranging from finance and healthcare to media and entertainment. The demand for AI-driven automation, personalization, and data analysis is projected to drive massive investments in the sector.

“Generative AI is set to fundamentally alter the business landscape, and we are positioning ourselves at the forefront of that revolution,” said David Snyderman, the managing partner of Magnetar. “Through this fund, we aim to support entrepreneurs who are at the cutting edge of AI development, while also generating long-term value for our investors.”

Part of Fund AI’s value proposition is its partnership with CoreWeave, an AI hyperscaler that provides large-scale cloud services to support the development, training, and deployment of AI and machine learning models. This partnership allows Magnetar to offer its portfolio companies dedicated access to high-performance compute (HPC) resources, as well as technical support and expertise in managing complex AI workloads. Emerging AI companies often face bottlenecks in securing adequate compute resources and support services.

“As AI adoption continues to accelerate, the demand for scalable infrastructure has become essential. HPC will play a crucial role in enabling the next generation of AI-driven companies to succeed,” said Jim Prusko, a senior portfolio manager and partner at Magnetar. “Our collaboration with CoreWeave will give our portfolio companies access to cutting-edge technology and infrastructure, providing them with a significant competitive advantage.”

One of the primary backers of the new fund, Chicago-headquartered PEAK6 Strategic Capital, has a long-standing reputation in fintech and alternative investments. “We’re thrilled to partner with Magnetar and contribute to the next wave of AI-driven innovation,” said Jenny Just, co-founder and managing partner of PEAK6, who also serves as the chairman of Chicago-based Apex Fintech Solutions. “Our investment reflects our strong belief in the transformative potential of AI and our confidence in Magnetar’s approach to unlocking its value.”

Magnetar was founded in 2005 and invests across a range of strategies, including alternative credit, systematic trading, healthcare, and venture capital. As of June 2024, the firm had $17.5 billion of assets under management. Magnetar is headquartered just north of Chicago in Evanston, Illinois.