It was the resignation that went around the world. Jensen Huang, Nvidia’s embattled CEO who co-founded and led the company for 33 years, had officially resigned. “It’s like a bomb went off,” one Neocloud founder told TechCrunch when he first heard the news.
In recent years, Nvidia has been a prolific investor, investing tens of billions in startups each year and participating in 105 rounds this year alone, often as the largest investor, according to PitchBook. “If this direction changes, it will be a huge blow to so many young companies,” said Maria Davidson, founder of Relational Capital.
Huang’s absence leaves the startup ecosystem without one of its biggest champions and with far less capital for now, investors say, which could have a huge impact on deals, valuations, financing and even competition.
“Nvidia has almost every native AI startup, from apps to neocloud,” Shamillah Bankiya of Dawn Capital told TechCrunch.
Most major decisions to invest in startups often came from Jensen himself, according to Umesh Padval, managing partner at Seligman Ventures. Padval has known Huang since he served on the board of Mellanox Technologies, a networking chipmaker acquired by Nvidia for about $7 billion in 2020. While there is hope that Huang’s eventual successor will resume his deal-making spree, investors aren’t hopeful that will happen in the near term.
Nvidia interim CEO Colette Kress is expected to introduce some changes, particularly regarding Nvidia’s investments in AI startups, the heart of building billion-dollar data centers. Huang’s frantic negotiations in this area have been a source of concern for Wall Street.
“She’s a lot more conservative,” one investor said of Kress. “I don’t think she’s going to commit the same amount of money to keep the ecosystem going in the early stages.”
Nvidia’s biggest bets were supporting neoclouds, inference providers and open weighting models, which are expensive for smaller companies to build. “Jensen’s initiatives are one of the main reasons why an ecosystem has emerged despite this,” said Zain Javaid, co-founder of hardware company Ghost.
For example, Nvidia backed CoreWeave while it was still private and participated in two of Crusoe’s funding rounds, including its $1.4 billion Series E. It bought Hugging Face this year for $13 billion (expected to close in 2027) and has investments in Mistral AI, Lambda and Black Forest Labs. Nvidia was often the largest investor in the deals. Last year, it wrote an $800 million check as part of a $2 billion Series B round for Reflection AI, before the open source startup began generating significant revenue, according to the Wall Street Journal.
“Jensen believed in open source and, frankly, Europe,” Bankiya said of how Huang invested so much in AI across the world. Stopping this support in other regions outside of America, such as Europe, “would be a massive funding and, honestly, ecosystem gap that no one can fill.”
It’s also true that Nvidia was such a dominant player in the ecosystem that it sometimes seemed like a monopoly. By backing so many companies with such generous checks, Nvidia effectively forced these startups to use its chips, which helped solidify its dominant position in the market.
If the company becomes more cautious in investing in startups, that could leave more room for rivals and smaller rivals. (Coincidentally, Google announced two new chips this week amid the Huang Nvidia fallout.)
Some investors TechCrunch spoke with hope that big cloud computing companies and other chipmakers will step in to support startups and fill some of the void that will likely be left by Huang.
Dharmesh Thakker, general partner at Battery Ventures, for example, expects Big Tech rivals to compete for Nvidia’s investment crown, “based on who brings the best combination of a great product, ecosystem and community to compete with CUDA, and the financial power to fund the ecosystem,” he said. CUDA is Nvidia’s software platform that allows developers to run AI models on its GPUs.
While companies like Google, Amazon, Microsoft and AMD may back mature startups to drive adoption of their chips and clouds, Thakker doubts they will invest hundreds of millions in pre-revenue infrastructure startups like Nvidia has done.
Under Huang, infrastructure companies that needed $100 million to $500 million in GPUs often raised half that amount for a valuation of $1 billion or more from Nvidia just to get started, one VC said. The chipmaker’s participation gave other investors the comfort of backing these companies with high valuations.
Nvidia is now expected to be more selective in the new companies it backs, while writing smaller checks in its existing portfolio, contributing to lower valuations.
“When Nvidia was on the cap table, everyone felt safe,” Padval said. Without that support, investors say traditional venture capital firms will likely think twice before writing checks to these startups and could even put some deals on hold.
Despite this, few believe that Nvidia’s investment slowdown will single-handedly put an end to the broader AI boom.
Although everyone agrees that Huang represents a huge loss for Nvidia, one of his ex-employees, Amulya Vishwanath, who now runs her own venture capital fund, said that “founders and executives need to be held accountable” and that the ecosystem is bigger than one person. “This talent will and must continue to thrive. »
When you purchase through links in our articles, we may earn a small commission. This does not affect our editorial independence.
Gn bussni
