Australian entrepreneur sells AI firm Modular in $5.6bn deal

The Rise of an Australian Tech Entrepreneur

A Silicon Valley AI software start-up, co-founded and led by an Australian entrepreneur, is set to be sold for $US3.9 billion ($5.6 billion) after only four years in business. The company, Modular, announced last Thursday morning Australian time that it was being acquired by Nasdaq-listed Qualcomm in an all-scrip deal. This acquisition marks a significant milestone for the founder, Tim Davis, who has built a successful career in the technology sector.

Background of Tim Davis

Tim Davis, 43, started Modular with American co-founder Chris Lattner in 2022. This was a decade after he had flown from Australia to Silicon Valley in September 2012 with dreams of becoming an entrepreneur. Before this, Davis had worked as a financial analyst at National Australia Bank and completed internships at law firms like Allens and Minters after finishing his law, business, and commerce degrees at Melbourne’s Monash University.

Modular provides software that allows AI to run efficiently across hardware architectures, enabling developers to deploy AI at a lower total cost. The deal makes Davis one of Australia’s most influential and successful technology founders. His company’s platform is designed to allow developers to run AI applications across different computer chips without having to rewrite code for each one.

Key Clients and Technology

Modular services cloud providers such as Oracle and Amazon, and also AI chipmakers like Nvidia and AMD. The company claims to have built the world’s fastest AI inference engine – software that enables AI programs to run and scale to millions of people – and its own programming language, Mojo, a superset of Python (the world’s most popular programming language), which enables developers to deploy their AI programs tens of thousands of times faster, reduce costs, and make it more simple to deploy AI around the world.

Davis expressed his thoughts on the challenges and rewards of entrepreneurship, stating, “On a personal note, company building is an incredible adventure, a rollercoaster of the highest highs and the lowest lows, and the thing that matters most is to keep going – don’t stop, don’t give up.” He added, “I came to the USA with nothing more than a suitcase and a laptop, and almost 14 years later it’s been the ride of a lifetime.”

The Acquisition Deal

Qualcomm said as consideration for the acquisition, it expects to issue up to 19.2 million shares of its common stock to equity owners of Modular. That values the deal at around $US3.92 billion, based on Qualcomm’s share price earlier last week. The deal is expected to be finalised later this year, resulting in a big payday for Davis and his shareholders after a remarkable rise in Silicon Valley for the Australian.

Modular last year raised $US250 million from investors for a $US1.6 billion valuation, after previously raising a combined $US130 million in two deals across 2022 and 2023.

Early Career and Challenges

Before founding Modular, Davis survived a stint in a wild house known as the “Hacker Fortress,” started an early version of an online food delivery service before the rise of UberEats and others, and was poached by Google only to leave the technology giant in 2022 to co-found Modular. He had started his own company called CrowdSend in 2011, which had a software system for identifying objects in images and pictures and matching them to retailers.

In a 2023 interview, Davis mentioned that he found it “difficult” as “investors in Australia if you wanted to raise some seed capital they would take a very large percentage of the business.” He flew to Silicon Valley, stayed in what was called Hacker Fortress in the Los Altos Hills, where Davis developed an online food delivery business called Fluc (Food Lovers United Co) before joining Google, where he worked as a product manager and then joined the ad division where he built machine learning systems and the Google Brain research division dedicated to AI – where he met Lattner.

Future Outlook

The acquisition of Modular by Qualcomm highlights the growing influence of Australian entrepreneurs in the global tech landscape. Davis’s journey from Melbourne to Silicon Valley exemplifies the potential for innovation and success when driven by determination and vision. As the deal moves forward, it will be interesting to see how this acquisition impacts the future of AI development and the broader technology industry.