Key Takeaways
- • Nvidia CEO Jensen Huang, who co-founded and led the company for 33 years, has officially stepped down, and VCs and founders say the departure removes one of the largest sources of AI startup capital.
- • According to PitchBook, Nvidia participated in 105 funding rounds this year alone, often as the largest investor, and had been pouring tens of billions of dollars into startups annually.
- • Interim CEO Colette Kress is expected to be more conservative with Nvidia's startup investments, with investors saying she is unlikely to commit the same level of capital to early-stage ecosystem building.
- • Investors expect Nvidia to be more selective with new companies and to write smaller checks into existing portfolio companies, which could pressure valuations for AI infrastructure startups.
- • Investors hope Big Tech companies and other chipmakers will fill the funding gap, though few expect them to deploy hundreds of millions into pre-revenue infrastructure startups as Nvidia did.
Summary
Jensen Huang, Nvidia's CEO who co-founded and led the company for 33 years, has officially stepped down, a development that investors and founders told TechCrunch will leave a significant gap in AI startup funding. One neocloud founder described the news as "like a bomb went off." According to PitchBook, Nvidia has been a prolific investor, pouring tens of billions of dollars into startups annually and participating in 105 rounds this year alone, often as the largest investor. Maria Davidson, founder of Relational Capital, said that if Nvidia's investment direction changes, "it'll be a big blow to so many young companies."
Investors say most significant decisions to invest in startups came from Huang himself, according to Umesh Padval, managing partner at Seligman Ventures. While there is hope that Huang's eventual successor will resume the dealmaking, investors do not expect that to happen in the short term. Interim CEO Colette Kress is expected to institute changes, particularly regarding Nvidia's investments in AI startups tied to the billion-dollar data center build-out, which had been a source of concern on Wall Street. One investor described Kress as "much more conservative," adding, "I don't think she's going to commit the same amount of money to keep the early-stage ecosystem going."
Nvidia's largest bets included neoclouds, inference providers, and open-weight models, which are costly for smaller companies to build. Examples cited include its early backing of CoreWeave while still private, its participation in two of Crusoe's rounds including a $1.4 billion Series E, and its $13 billion acquisition of Hugging Face, which is expected to close in 2027. Nvidia also holds investments in Mistral AI, Lambda, and Black Forest Labs. According to the Wall Street Journal, Nvidia wrote an $800 million check into a $2 billion Series B round for Reflection AI last year. Investors also note that Nvidia's generous backing often locked startups into using its chips, reinforcing its dominant market position.
Infrastructure companies that needed $100 million to $500 million in GPUs would often raise half that amount at valuations of $1 billion or more from Nvidia, giving other investors comfort at those valuations. Now Nvidia is expected to be more selective and to contribute smaller checks to its existing portfolio, which is expected to contribute to a drop in valuations. Dharmesh Thakker, general partner at Battery Ventures, expects Big Tech rivals to compete for Nvidia's investment position, though he doubts Google, Amazon, Microsoft, and AMD will commit hundreds of millions to pre-revenue infrastructure startups. Padval summarized the impact: "When Nvidia was on the cap table, everyone felt safe." Few believe the slowdown alone will halt the broader AI boom.
Investors say most significant decisions to invest in startups came from Huang himself, according to Umesh Padval, managing partner at Seligman Ventures. While there is hope that Huang's eventual successor will resume the dealmaking, investors do not expect that to happen in the short term. Interim CEO Colette Kress is expected to institute changes, particularly regarding Nvidia's investments in AI startups tied to the billion-dollar data center build-out, which had been a source of concern on Wall Street. One investor described Kress as "much more conservative," adding, "I don't think she's going to commit the same amount of money to keep the early-stage ecosystem going."
Nvidia's largest bets included neoclouds, inference providers, and open-weight models, which are costly for smaller companies to build. Examples cited include its early backing of CoreWeave while still private, its participation in two of Crusoe's rounds including a $1.4 billion Series E, and its $13 billion acquisition of Hugging Face, which is expected to close in 2027. Nvidia also holds investments in Mistral AI, Lambda, and Black Forest Labs. According to the Wall Street Journal, Nvidia wrote an $800 million check into a $2 billion Series B round for Reflection AI last year. Investors also note that Nvidia's generous backing often locked startups into using its chips, reinforcing its dominant market position.
Infrastructure companies that needed $100 million to $500 million in GPUs would often raise half that amount at valuations of $1 billion or more from Nvidia, giving other investors comfort at those valuations. Now Nvidia is expected to be more selective and to contribute smaller checks to its existing portfolio, which is expected to contribute to a drop in valuations. Dharmesh Thakker, general partner at Battery Ventures, expects Big Tech rivals to compete for Nvidia's investment position, though he doubts Google, Amazon, Microsoft, and AMD will commit hundreds of millions to pre-revenue infrastructure startups. Padval summarized the impact: "When Nvidia was on the cap table, everyone felt safe." Few believe the slowdown alone will halt the broader AI boom.
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