It was the resignation heard across the world. Jensen Huang, Nvidia's embattled CEO who co-founded and led the company for 33 years, had officially stepped down. "It's like a bomb went off," one neocloud founder told TechCrunch when he first heard the news.
Over the last several years, Nvidia has been a prolific investor, pouring tens of billions into startups annually, and participating in 105 rounds this year alone often as the largest investor, according to PitchBook. "If that direction changes, it'll be a big 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 massive impact on dealmaking, valuations, funding, and even competition.
"Nvidia is carrying almost every AI-native startup from application to neocloud," Dawn Capital's Shamilla Bankiya told TechCrunch.
Most of the significant decisions to invest in startups often came from Jensen himself, according to Umesh Padval, managing partner at Seligman Ventures. Padval has known Huang since serving on the board of Mellanox Technologies, a networking chipmaker Nvidia acquired for approximately $7 billion in 2020. While there is hope that Huang's eventual successor will resume his dealmaking spree, investors aren't hopeful that it will happen in the short term.
Nvidia's interim CEO, Colette Kress is expected to institute some changes, especially when it comes to Nvidia's investments into AI startups at the crux of the billion-dollar data centre build-out. Huang's rampant dealmaking in this sphere has been a source of concern for Wall Street.
"She's much more conservative," one investor said of Kress. "I don't think she's going to commit the same amount of money to keep the early-stage ecosystem going."
Nvidia's biggest bets were backing neoclouds, inference providers, and open weight models, which are expensive for smaller companies to build. "Jensen's initiatives are a big reason an ecosystem has emerged despite that," Zain Javid, co-founder of the hardware company Ghost, said.
For instance, Nvidia backed CoreWeave back when it was still private, and participated in two of Crusoe's rounds, including its $1.4 billion Series E. It bought Hugging Face this year for $13 billion (expected to close in 2027) and holds 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 into a $2 billion Series B round for Reflection AI, before the open-source startup began to earn meaningful revenue, according to the Wall Street Journal.
"Jensen believed in open source and frankly speaking, Europe," Bankiya said of how Huang invested so much in AI across the world. The cease of that support in other regions outside of America, like 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 at times, it felt like a monopoly. By backing so many companies with such generous checks, Nvidia effectively locked those startups into using its chips which helped reinforce its dominant market position.
If the company does grow more conservative with its startup investments, that could leave more room for rivals and smaller competitors. (Coincidentally, Google announced two new chips this week amid Huang's Nvidia fallout).
Some investors with whom TechCrunch spoke hope that large cloud companies and other chipmakers will step in to back startups and fill some of the void that will likely be left by Huang.
Dharmesh Thakker, a general partner at Battery Ventures, for example, expects big tech rivals to vie for Nvidia's investment crown, "depending upon who brings the best combination of a great product, an ecosystem and community to compete with CUDA, and the financial power to bankroll the ecosystem," he said. CUDA is Nvidia's software platform that enables 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 pour hundreds of millions into pre-revenue infrastructure startups the way Nvidia did.
Under Huang, infrastructure companies that needed $100 million to $500 million in GPUs would often raise half of that amount at valuations of $1 billion or more from Nvidia just to get started, one VC said. The chipmaker's participation gave other investors the comfort in backing these companies at the lofty valuations.
Now, Nvidia is expected to be more selective in the new companies it backs, while writing smaller-sized checks into its existing portfolio, contributing to a drop in valuations.
Even so, few believe that Nvidia's investment slowdown will by itself halt the broader AI boom.
Though everyone agrees that Huang is a massive loss for Nvidia, one of his ex-employees, Amulya Vishwanath, who now runs her own VC fund, said that "founders and leaders must be held accountable," and that the ecosystem is bigger than one person. "That talent will, and must, continue to thrive."
