Oxide Computer Company announces a $445M Series D, opening with the milestone that ordinary operations made it pay income tax this spring, and explains why a profitable hardware company still raises: to keep accepting new demand, expand manufacturing capacity and build an enduring company.

Our $445M Series D

In the spring, we hit a pretty wild milestone: Oxide paid income tax. And not because of some unusual transaction or one-time event, but because our ordinary operations (selling computers!) generated taxable income after accounting for the costs of components, manufacturing, salaries, and running the rest of the business. Of course, we each individually pay income tax every year; is it that surprising that a company is doing what we all do every spring?

Well, yes, it is: most startups don’t pay income tax because most startups aren’t profitable! Indeed, startups seek investment because they have costs long before they have revenue, let alone gross profit — let alone income. This is by design: profitability is a lagging indicator of product/market fit (the adventure in venture capital is investing long before the business has materialized!).

So this was a big milestone, and on top of that (and contrary to Russ Hanneman’s admonition!), we have a very large order backlog. On the one hand, it’s truly extraordinary to watch the business generate cash, but with demand far exceeding supply, significant cash is needed to secure inventory and fulfill these orders. This is one of the peculiar dynamics of a rapidly growing hardware business: we must commit substantial cash to components and manufacturing well before the resulting systems reach customers.

Now, between our Series B, Series C, our existing debt facilities, and the cash generated by the business itself, we felt confident we could satisfy our current backlog, but the absolute numbers are large enough that we would have had to exercise real caution in accepting additional demand. We are, after all, children of the Dot Com bust — cautious by nature — and would not put the business in a position where new supply disruptions, economic shocks, or other events outside our control could jeopardize it.

Fortunately, this is the problem that capital is born to solve. Our investors saw this too: they have been extraordinary believers in Oxide from the beginning, and, thrilled by the burgeoning demand, they wanted to be sure that we were properly positioned to fully take advantage of Oxide’s large market.

As they have so many times for us over the seven years of the company, Eclipse stood up to lead, and our $445M Series D quickly came together. Existing investors USIT, Riot Ventures, and Jane Street signed up for big pieces — and others on the cap table including Friends and Family Capital and Counterpart eagerly joined in.

We are deeply appreciative of the support of these existing investors, but we also wanted to add new investors to the company. While there was a lot of outside interest (profitability being the ultimate VC aphrodisiac!), there was one firm that stood above the rest: Atreides Management, which first got to know us nearly two years ago and has stayed close to the company ever since. We love their analytical approach, their courage in hard-tech investing — and their belief in Oxide.

Finally, we are thrilled to welcome AMD as a new strategic investor. AMD has long been a believer in Oxide: it was with their support that we were able to achieve breakthroughs like our own platform enablement software. And of course, we have been big believers in AMD: one of our first big bets was on AMD EPYC. We think the partnership between AMD and Oxide is a lasting one, and it’s fitting to have that expressed in the cap table.

All of these investors are — like us — in it for the long haul. When we raised our $200M Series C, we said that it was to entirely de-risk the company with respect to capital, to assure both our longevity and our independence. This Series D builds on that assurance to allow us to satisfy our substantial backlog while continuing to accept new demand, expand manufacturing capacity, and invest for the enduring company that we have always set out to build.

To our investors, partners, fans, long-time listeners, employees, and most of all customers: thank you. While this is but a milestone on the long road to what we know Oxide will be, it is nonetheless an exhilarating one!