When is a startup not a startup? When it’s a public company with 1,300 employees and $2.5 billion in capital. This is the reality for Nebius, a new AI infrastructure business emerging from the former tech giant Yandex, often referred to as the “Google of Russia.”
Arkady Volozh, Yandex co-founder and former CEO, explained the situation in an interview with TechCrunch. “It’s like a startup because we are ‘starting up,’ but it’s an unusually big one,” Volozh said. “What we’re trying to build will actually require even more resources, more people, and much more capital.”
Volozh was forced out of Yandex in 2022 after the European Union placed him on a sanctions list following Russia’s Ukraine invasion. The EU removed him from the list in March this year, allowing him to return as CEO of Yandex’s new incarnation. This new entity’s team and data centers are entirely outside Russia.
The Yandex Transition
Yandex LLC, founded in 1997, was known for its wide range of services, including search, e-commerce, advertising, maps, and transportation. While its core audience was in Russia and nearby markets, its parent company, Yandex N.V., was a Dutch holding organization. Yandex N.V. went public on Nasdaq in 2011 and later listed on the Moscow Exchange.
Yandex N.V. was performing well as a public company, reaching a peak market cap of $31 billion by late 2021. However, the Russia-Ukraine conflict changed everything. Nasdaq halted trading due to sanctions. Initially, Nasdaq intended to delist Yandex but eventually maintained its listing while pausing trading as Yandex N.V. severed ties with Russia.
In February, Yandex N.V. announced its exit strategy. It sold its Russian assets, which constituted the majority of its business, for $5.4 billion to a Russian consortium. The transaction included $2.5 billion in cash and the rest in shares, forced by a Russian government rule requiring at least a 50% discount for divestments involving parent companies from “unfriendly” countries.
The sale was finalized this week, and Yandex N.V. is distancing itself from its past, including its name. Pending shareholder approval, it will adopt the name of one of its remaining assets, an AI cloud platform called Nebius AI, launched last year.
AI Compute Demand and Future Plans
Nebius is competing in the AI compute market, primarily against dedicated “GPU-as-a-service” startups like U.S.-based CoreWeave and French startup Flex AI. Nebius, though not technically a startup, is starting anew with assets outside Russia. These assets include Avride, a Texas-based autonomous vehicle company; Toloka AI, a generative AI company; TripleTen, an edtech platform; and a Finnish data center and AI cloud platform, Nebius AI.
Nebius aims to become a leading player in Europe’s AI infrastructure market. It plans to expand its Finnish data center’s capacity to nearly 100 megawatts and build additional data centers across Europe. Nebius is starting with significant capital and leveraging its partnership with Nvidia.
Arkady Volozh remains optimistic about Nebius’s future. The company is focusing on scaling its operations and positioning itself as a strong player in the AI infrastructure space.
Talent Pool and Global Presence
With around 1,300 employees, Nebius boasts a team with significant experience in building compute infrastructure. Most of its engineers have transitioned from the old Yandex business. Nebius’s workforce is spread across various locations, including Amsterdam, Israel, the U.S., and Belgrade.
The company’s geographical spread resulted from where its subsidiaries were based and the willingness of certain countries to accept workers fleeing the conflict. Israel was the first country to accept Volozh’s workers, followed by European countries like the Netherlands.
Nebius has undergone a significant transformation, repurposing its resources to meet growing AI compute demand. The company’s journey reflects a blend of startup dynamics and large-scale infrastructure development, positioning it well for future growth.
