Nov 13 (Reuters) - AI cloud startup CoreWeave said on

Wednesday it has closed a $650 million minority investment led

by Jane Street, Magnetar, Fidelity Management and Macquarie

Capital, as investors look to capitalize on the generative AI

boom.

The secondary sale, which involves existing shareholders

selling their holding to new investors, valued the company at

$23 billion, according to a source familiar with the matter.

CoreWeave in May was valued at $19 billion after a $1.1

billion series C investment led by private equity firm Coatue, a

source had said at the time.

Demand for cloud computing services such as those provided

by specialized firms like CoreWeave has sky-rocketed since the

launch of OpenAI's ChatGPT in late 2022 as businesses rush to

develop their own generative AI applications.

CoreWeave provides services powered by pricey and

supply-constrained AI chips, such as those sold by backer and AI

bellwether Nvidia ( NVDA ).

The company competes against cloud computing service

providers such as tech giant Microsoft's ( MSFT ) Azure and

Amazon's ( AMZN ) AWS.

The round included additional participation from Cisco

Investments, Pure Storage ( PSTG ), BlackRock ( BLK ),

Coatue, Neuberger Berman and others, the company said.

CoreWeave engaged Morgan Stanley and Goldman Sachs in

connection with this transaction.

Funding of AI and cloud companies in the U.S., Europe and

Israel is rising after three years of decline and is estimated

to hit $79.2 billion by the end of the year, venture capital

firm Accel said in October.

OpenAI closed a $6.6 billion funding round in October at a

$157 billion valuation.