Huang’s resignation puts 105 Nvidia AI funding rounds in focus

Daniel Okafor

Nvidia has participated in 105 startup funding rounds this year, often as the largest investor. Jensen Huang, the embattled co-founder and CEO, officially stepped down after 33 years. The chipmaker had invested tens of billions of dollars in startups annually in recent years, according to PitchBook.

What does Huang’s departure change?

One neocloud founder told TechCrunch: “It’s like a bomb went off.” Relational Capital founder Maria Davidson said: “If that direction changes, it’ll be a big blow to so many young companies.” Investors expect less capital for now, potentially affecting dealmaking, valuations, funding and competition, while Huang’s absence removes one of the AI startup market’s most powerful champions.

Dawn Capital’s Shamilla Bankiya said: “Nvidia is carrying almost every AI-native startup from application to neocloud.” Most significant startup investment decisions often came from Huang personally, according to Seligman Ventures managing partner Umesh Padval. Padval knew Huang through Mellanox Technologies, a networking-chip maker Nvidia acquired for approximately $7 billion in 2020.

Will Colette Kress change the investment pace?

Colette Kress, Nvidia’s interim CEO, is expected to alter AI-startup commitments and the pace of broader investment activity at the crux of the billion-dollar data-centre build-out. Huang’s rapid dealmaking had concerned Wall Street. An investor said: “She’s much more conservative. I don’t think she’s going to commit the same amount of money to keep the early-stage ecosystem going.”

Investors hope Huang’s eventual successor will resume large-scale dealmaking, but they do not expect that soon. Kress may instead favour fewer new companies and smaller checks across the existing portfolio.

How large were Nvidia’s bets?

Huang’s largest bets targeted neoclouds, inference providers and open-weight models, three categories that smaller companies found expensive to build and around which Nvidia helped build a broader ecosystem. Ghost co-founder Zain Javid said: “Jensen’s initiatives are a big reason an ecosystem has emerged despite that.”

• Nvidia backed CoreWeave while it remained private and joined two Crusoe funding rounds, including a $1.4 billion Series E.
• Nvidia agreed to buy Hugging Face this year for $13 billion, with the deal expected to close in 2027.
• Its portfolio also includes Mistral AI, Lambda and Black Forest Labs; Nvidia was often the largest investor across these startup deals.
• Last year, Nvidia put $800 million into Reflection AI’s $2 billion Series B, equal to 40% of the round, before the open-source startup generated meaningful revenue, according to The Wall Street Journal.

What did Nvidia’s backing mean for valuations?

Infrastructure companies needing $100 million to $500 million in GPUs often raised half that amount, or $50 million to $250 million, from Nvidia at valuations of $1 billion or more just to begin, one venture capitalist said. Nvidia’s involvement gave other investors confidence to back those lofty valuations.

Padval said: “When Nvidia was on the cap table, everyone felt safe.” Without Nvidia’s backing, traditional venture funds are likely to think twice and may pause deals. The expected policy shift—fewer new companies and smaller checks in existing holdings—would also contribute to lower valuations.

Can rivals fill the funding gap?

Some investors hope large cloud providers and chipmakers will fill some of the gap. Google announced two new chips this week amid the leadership fallout.

Battery Ventures general partner Dharmesh Thakker expects big-tech rivals to compete 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 for running AI models on its GPUs.

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, as Nvidia did under Huang.

Does conservative investing weaken Nvidia’s grip?

Nvidia’s dominance sometimes felt like a monopoly because large, generous checks tied startups to its chips and reinforced its dominant position across the AI market. More selective investing could open space for smaller rivals.

Bankiya said: “Jensen believed in open source and frankly speaking, Europe.” She warned that ending support outside America, particularly in Europe, would create “a massive funding and honestly ecosystem gap that no one can fill.”

Could this halt the AI boom?

Few observers believe Nvidia’s investment slowdown alone will stop the broader AI boom, even though they regard Huang as a major loss for Nvidia and see the ecosystem as broader than one executive. Former Nvidia employee Amulya Vishwanath, who now runs her own venture fund, said: “founders and leaders must be held accountable.” She added: “That talent will, and must, continue to thrive.”