Huang is gone, what will AI startups do?

Jensen Huang's departure from Nvidia shook not only the company, but also the world of financing artificial intelligence startups. Speaking to TechCrunch, a startup founder described the moment he first heard the news as "It was like a bomb went off." Huang was at the helm of the company he co-founded for 33 years.

Nvidia has been one of the companies investing the most money in startups in recent years. According to PitchBook data, the company has poured tens of billions of dollars into startups each year and participated in 105 investment rounds this year alone; The largest investor in most of these was Nvidia.

Investment decisions were largely made by Huang

According to Umesh Padval of Seligman Ventures, most of the major decisions about investing in startups came directly from Huang. Investors hope that the name that will replace Huang will continue this pace, but they do not believe that this will happen in the short term.

Interim CEO Colette Kress is expected to make changes, especially regarding artificial intelligence initiatives at the center of data center investments. One investor commented on Kress, "He is much more cautious." We explained Huang's resignation process in our news that the 33-year Huang term at Nvidia is over.

Investments ranging from CoreWeave to Hugging Face

Nvidia's biggest bets were on cloud-based GPU providers, inference services, and vulnerability-heavy models. The company backed CoreWeave before it went public, participating in two Crusoe rounds, including a $1.4 billion series E investment round. This year it acquired Hugging Face for $13 billion; The transaction is expected to be completed in 2027. It also has stakes in Mistral AI, Lambda and Black Forest Labs.

Last year, Nvidia invested $800 million in open source startup Reflection AI's $2 billion Series B round before it had yet generated meaningful revenue, according to the Wall Street Journal. According to one investor, infrastructure companies that needed $100 to $500 million for GPUs were collecting half of this amount from Nvidia, often at valuations of $1 billion or more.

Who will fill the gap?

Investors hope major cloud companies and other chipmakers will fill some of the gap. Battery Ventures' Dharmesh Thakker says Google, Amazon, Microsoft and AMD may invest in mature startups, but he doesn't expect them to pour hundreds of millions of dollars into infrastructure startups like Nvidia that haven't yet generated revenue, says Dharmesh Thakker of Battery Ventures.

On the other hand, Nvidia being more selective could also open up space for competitors. Generous investments were connecting startups to Nvidia chips, strengthening the company's dominance in the market. The majority of investors still believe that this slowdown alone will not stop the artificial intelligence boom. You can find the initiative of Nvidia employees asking for Huang back in our news Nvidia employees want Huang back.

Cover image: Anders Eidesvik, Wikimedia Commons (CC BY-SA 4.0).