US hardware startup Unconventional AI has announced the acquisition of Israeli chip company NeuReality. No financial details about the deal were disclosed but market estimates are that Unconventional AI is paying $150-200 million in cash and shares for the company cofounded by CEO Moshe Tanach. No response from the companies was forthcoming about the terms of the deal.
While this may not be an impressive exit, the acquisition allows employees and investors, including Ezra Gardner’s Varana Capital, Udi Angel’s XT, Cardumen Capital, and Samsung, to hold shares in one of Silicon Valley’s most intriguing and promising unicorns, alongside investors including Amazon founder Jeff Bezos, as well as major venture capital firms such as Sequoia, Andreessen Horowitz, Lightspeed, and Lux Capital.
Within two months of its founding, Unconventional raised $475 million at a $4.5 billion valuation, marking one of the largest seed rounds ever, to develop an AI chip. This chip utilizes a technology that is 1,000 times more energy efficient than Nvidia’s, based on analog circuits that have not yet been deployed commercially and were previously confined to academic laboratory experiments.
On the face of it, this is a deal that provides a reasonable return to NeuReality’s investors, even though the final outcome falls far short of what they had aimed to achieve. The company raised a total of $105 million since its inception - a relatively modest amount for an AI chip company. The biggest winner in this deal is the company’s first investor and largest shareholder: Varana Capital, a Colorado-based private equity fund founded by Ezra Gardner. Other investors who backed NeuReality as early as 2020, at a valuation of just $12 million, include Israeli funds Cardumen Capital and OurCrowd, as well as Naveen Rao.
Rao, a serial entrepreneur who had previously sold a company to Intel, is now spearheading the acquisition of NeuReality in his capacity as CEO of Unconventional. According to the PitchBook database, a subsequent $37 million funding round in July 2023 led by Cardumen, XT, and Varana, valued NeuReality at $220 million. Other, smaller-scale investors in the company include Samsung Ventures and chipmaker ARM.
Following the deal’s signing, NeuReality founder Moshe Tanach, along with most of the company’s management and R&D staff, will join Unconventional AI’s team. However, some personnel in sales, marketing, and finance will be laid off. The approximately 40 employees in Caesarea and Tel Aviv will join a similar number of staff in California to jointly manage the company.
NeuReality was founded in 2019 by Moshe Tanach, Zvika Shmueli, and Yossi Kasus, all veterans of Intel, Marvell, Mellanox, and Habana Labs. Tanach previously served as a senior R&D executive in communications chips at Intel and Qualcomm, after selling his startup DesignArt in 2012.
Rao said, "The hardest thing in this industry is assembling a team that can build real silicon and the systems around it, and Moshe has built one of the best. We are chasing a 1,000x improvement in AI compute efficiency, and that is a systems problem as much as a physics problem. We think unconventionally about computing, and the accelerating pace of our research calls for an unconventional approach to growth. Bringing NeuReality's team into Unconventional accelerates our roadmap significantly."
Tanach added, "We built NeuReality because we believed the economics of AI inference were fundamentally broken, and that the answer had to come from rethinking the system rather than tuning it. Unconventional is taking that conviction further than anyone else in the market. With demand for AI computation growing against finite energy and semiconductor capacity, this mission has never been more essential. This is the next chapter of the mission we started with: fixing the economics of AI, now with the platform to do it at full scale."
Published by Globes, Israel business news - en.globes.co.il - on October 26, 2026.
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