It was a cry of resignation heard around the world. Embattled CEO Jensen Huang, who co-founded Nvidia and led the company for 33 years, has officially stepped down. “It’s like a bomb went off,” one NeoCloud founder told TechCrunch when he first heard the news.
Nvidia has been a prolific investor in recent years, pumping tens of billions of dollars into startups every year, participating in 105 rounds this year alone, often as the largest investor, according to PitchBook. “If that direction changes, it will be a huge blow to a lot of young companies,” said Maria Davidson, founder of Relational Capital.
With Huang’s absence, the startup ecosystem loses one of its biggest champions, leaving it with significantly less capital for now, which could have a major impact on deals, valuations, funding and even competition, investors say.
“Nvidia is responsible for almost every AI-native startup, from applications to neocloud,” Dawn Capital’s Shamillah Bankiya told TechCrunch.
Most important decisions about investing in startups often came from Jensen himself, said Umesh Padval, managing partner at Seligman Ventures. Padval has known Huang since he served on the board of networking chip maker Mellanox Technologies, which Nvidia acquired for about $7 billion in 2020. While there is hope that Huang’s eventual successor will resume the takeover battle, investors don’t expect that to happen in the short term.
Nvidia’s interim CEO Colette Kress is expected to make some changes, particularly regarding Nvidia’s investments in AI startups, which are at the heart of the $1 billion data center buildout. Mr. Hwang’s rampant trading in this area is a cause for concern on Wall Street.
“She’s much more conservative,” one investor said of Ms. Kress. “I don’t think she would spend the same amount of money to maintain an early-stage ecosystem.”
Nvidia’s biggest bet was to back neoclouds, inference providers, and open-weight models that are expensive to build for small and medium-sized businesses. “Jensen’s work is a big reason why the ecosystem has emerged out of spite,” said Zayn Jaid, co-founder of hardware company Ghost.
For example, Nvidia backed CoreWeave when it was still private and participated in two rounds of Crusoe, including a $1.4 billion Series E. The company acquired Hugging Face for $13 billion this year (scheduled to close in 2027) and has investments in Mistral AI, Lambda, and Black Forest Labs. Nvidia was often the largest investor in these deals. Last year, the company wrote an $800 million check for Reflection AI’s $2 billion Series B round, before the open source startup started generating significant revenue, according to the Wall Street Journal.
“Jensen believed in open source and, frankly, Europe,” Bankilla said of how Huang invested heavily in AI around the world. If support in other regions outside the U.S., such as Europe, ends, “there will be a huge funding and, frankly, ecosystem gap that no one will ever be able to fill.”
It’s true that Nvidia was such a dominant player in the ecosystem that it sometimes felt like it had a monopoly. By backing so many companies with such generous checks, Nvidia effectively locked in those startups to use its chips and helped solidify its dominant position in the market.
If the company becomes more conservative in investing in startups, it could create more room for rivals and smaller competitors. (Coincidentally, Google announced two new chips this week under the influence of Huang’s Nvidia.)
Some investors TechCrunch spoke to are hoping that big cloud companies and other chipmakers will step in to support the startup and fill some of the hole that Huang may have left.
For example, Dharmesh Thakker, general partner at Battery Ventures, said he expects Big Tech rivals to compete for NVIDIA’s investment crown, saying, “It will come down to who brings the best combination of great products, the ecosystem and community to compete with CUDA, and the financial strength to fund the ecosystem.” CUDA is Nvidia’s software platform that allows developers to run AI models on GPUs.
Companies like Google, Amazon, Microsoft, and AMD may back mature startups to accelerate adoption of their chips and cloud, but they have doubts about pouring hundreds of millions of dollars into infrastructure startups that aren’t yet profitable, like NVIDIA.
Under Mr. Huang, infrastructure companies needing between $100 million and $500 million for GPUs often raised half that amount from Nvidia just to get started, at valuations of more than $1 billion, according to one venture capitalist. The participation of chipmakers has made other investors feel comfortable backing these companies at high valuations.
Nvidia is now expected to be more selective about the new companies it supports while writing smaller checks to its existing portfolio, contributing to the lower valuation.
“Everyone felt safe when NVIDIA was on the cap table,” Padval said. Without that backing, investors say traditional venture capital firms may think twice before writing checks to these startups and pause certain deals.
Still, few think that Nvidia’s investment slowdown will stop the broader AI boom.
While everyone agrees that Huang is a huge loss to Nvidia, one of his former employees, Amulya Vishwanath, who now runs his own VC fund, said “founders and leaders have to take responsibility” and that the ecosystem is bigger than one person. “That talent will and must continue to develop.”
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