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Published · 6h agoInvest2 min read

Apollo's Mercor check buys at most a quarter-point of a $20 billion company

Tens of millions against an expected $20 billion valuation works out to between 0.05% and 0.25% of Mercor, and the same firm led a $35 billion tranche of Anthropic compute financing in June.

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Artwork accompanying Apollo's Mercor check buys at most a quarter-point of a $20 billion company
Photo: finance.yahoo.com

What happened

  • The Information reported that Apollo has invested tens of millions of dollars in Mercor's latest funding round, which is expected to value the data-labeling startup at $20 billion.
  • Apollo has also backed the chip startup SiFive and the defense technology company Hadrian, expecting companies with high upfront costs to need financing beyond venture capital.
  • In June, Apollo led the $35 billion opening tranche of Broadcom's AI XPV Platform, in partnership with Blackstone, funding more than a gigawatt of Anthropic compute at Fluidstack-based sites.

Compiled by The InvestorSomething wrong?How this is made

Why it matters

  • capability A holding of 0.05% to 0.25% cannot move Apollo's returns, so what the check buys is early sight of a hardware-heavy company's financing need before the mandate is competed.
  • constraint With no venture vehicle behind them, these tickets are drawn on credit and hybrid capital mandates, so scaling them up means spending money those funds raised to lend.
  • exposure Holding equity in a company while writing its asset-backed loan puts Apollo on both sides of any argument about what the collateral is worth.
  • contradiction Blackstone's announcement calls Apollo an anchor investor in a platform while Bloomberg's sources call the same $35 billion a lenders' debt package, and the label decides whether this is investing or lending.

The report gives one number: tens of millions of dollars. So the ownership can only be bracketed. Ten million of a $20 billion valuation is 0.05%, and fifty million is 0.25% [2][1]. Fifty million is about 0.005% of the roughly $1.03 trillion Apollo managed at the end of March [11][3].

At that weight the equity is too small to be about the exit. The Information reported that Apollo expects startups like SiFive and Hadrian to need financing beyond venture capital because of higher upfront costs, and that it could provide debt or asset-backed financing, or arrange structures combining debt and equity [3][4]. The money comes from several Apollo-managed funds, including hybrid capital, not from a dedicated venture vehicle [5]. Apollo did not reply to MT Newswires' request for comment, and MT Newswires cautions that its Market Chatter items may include rumor and speculation [6][7].

The lending side of the same firm moves in units about 700 times larger [2]. On June 9 Broadcom named Apollo and Blackstone's Credit & Insurance business as initial anchor investors in the AI XPV Platform. It opened with a $35 billion tranche led by Apollo for more than a gigawatt of Anthropic capacity at Fluidstack-based sites [8][9]. "We are proud to deliver the capital foundation that allows this ecosystem to scale efficiently," said Jim Zelter, Apollo's president [10]. Bloomberg's sources described the same $35 billion as a debt package from a group of lenders, backing Anthropic's lease of TPUs [12].

Elsewhere in chip-backed credit, ten banks are providing $22 billion to Blackstone and Alphabet's Crux AI, secured on the chips and on customer contracts. A further structure above $60 billion is under discussion [13][12]. Those three deals come to $117 billion against equity tickets in the tens of millions [4].

I would call the startup equity a cheap origination cost, priced at four to five basis points of one fund complex. The counter-case is that a quarter of a percent confers nothing enforceable, and the report is silent on what information or governance rights the checks carry [2]. If Mercor and SiFive fund their hardware from equity markets instead, Apollo paid for a look at a mandate that never gets written.

What to watch

  • Disclosure of Apollo's actual ticket size when Mercor's round closes, which would narrow or break the 0.05-0.25% range.
  • Whether Apollo turns up as both an equity holder in one of these startups and the lender on its hardware, and on what security.
  • Whether Apollo raises a dedicated venture vehicle instead of writing these checks out of hybrid capital and other existing funds.

Claim ledger

Ranked by verification strength, evidence, and original report placement.

  1. [1]

    The Information reported that Apollo Global Management has started investing in AI and related hardware startups as it seeks to build relationships that could lead to future financing opportunities, citing people familiar with the matter.

    ReportedSource: The Information, via MT NewswiresView cited source
  2. [2]

    According to The Information, Apollo has invested tens of millions of dollars in Mercor's latest funding round, which is expected to value the data-labeling startup at $20 billion.

    ReportedSource: The Information, via MT NewswiresView cited source
  3. [3]

    Apollo has also invested in chip startup SiFive and defense technology company Hadrian, expecting such startups to need financing beyond venture capital due to higher upfront costs, The Information reported.

    ReportedSource: The Information, via MT NewswiresView cited source

Sources & coverage · 2 publishers

The reporting this story was synthesized from, earliest first. Every link goes to the original.

  1. finance.yahoo.com6h ago
    Market Chatter: Apollo Global Management Expands AI Startup Investments With an Eye on Future Financing
  2. blackstone.com6h ago
    Broadcom, Apollo, and Blackstone Establish Landmark Strategic Platform to Accelerate More Than 20 Gigawatts of Global AI Deployments - Blackstone
  3. finance.yahoo.com6h ago
    Banks Line Up $22 Billion Chip Loan Tied to Blackstone, Alphabet

Additional citations

  • The Information, via MT Newswires
  • Bloomberg, citing people with knowledge of the matter