What do they need so much capital for?

My guess is scaling up their ability to manufacture hardware.

I think the downvoting on you is a little harsh. TFA does allude to it, but doesn't explicitly answer your question. I presume the implicit answer is here:

> With growing customer enthusiasm, we were increasingly getting questions about what it would look like to buy a large number of Oxide racks. Could we manufacture them? Could we support them? Could we make them easy to operate together?

i.e. they need the capital in order to be able to satisfy large orders on sane timeframes - but that's very expensive when you're a hardware business.

They are a hardware company. Hardware costs a lot of money to innovate and build on.