Jensen Huang's Exit Threatens Nvidia's AI Startup Funding
Nvidia CEO Jensen Huang's resignation after 33 years leaves AI startups facing a funding gap, as investors expect interim CEO Colette Kress to cut the company's prolific startup bets.
Jensen Huang resigned as Nvidia (NVDA) CEO after 33 years, and investors say the move could cut a funding lifeline for AI startups. Nvidia participated in 105 startup rounds this year and pours tens of billions into startups annually, according to PitchBook figures cited by TechCrunch.
Nvidia has been a prolific investor, often the largest in the rounds it joined. Maria Davidson, founder of Relational Capital, said a change in direction would be a big blow to so many young companies. Dawn Capital's Shamilla Bankiya told TechCrunch that Nvidia is carrying almost every AI-native startup from application to neocloud.
Most significant investment decisions came from Huang himself, according to Umesh Padval, managing partner at Seligman Ventures, who has known Huang since serving on the board of Mellanox Technologies, a networking chipmaker Nvidia acquired for approximately $7 billion in 2020. Investors are not hopeful a successor resumes the dealmaking spree in the short term.
Interim CEO Colette Kress is expected to be more conservative. One investor told TechCrunch she is much more conservative and unlikely to commit the same amount of money to keep the early-stage ecosystem going. Kress's expected pullback comes as Nvidia's rampant startup dealmaking has drawn concern on Wall Street, TechCrunch reported, citing The Information.
Nvidia's biggest bets backed neoclouds, inference providers and open-weight models, which are expensive for smaller companies to build. The company backed CoreWeave while it was still private, took part in two of Crusoe's rounds including its $1.4 billion Series E, bought Hugging Face this year for $13 billion (expected to close in 2027), and holds investments in Mistral AI, Lambda and Black Forest Labs. Last year it wrote an $800 million check into a $2 billion Series B for Reflection AI, according to the Wall Street Journal.
Bankiya said Huang invested across the world, including Europe, and that a halt to that support would be a massive funding and ecosystem gap no one can fill in regions outside America.
By backing so many companies with generous checks, Nvidia effectively locked those startups into using its chips, reinforcing its dominant market position. A more selective approach could leave more room for rivals and smaller competitors; Google announced two new chips this week amid the fallout.
Dharmesh Thakker, a general partner at Battery Ventures, expects big tech rivals to vie for Nvidia's investment crown, but doubts they will pour hundreds of millions into pre-revenue infrastructure startups the way Nvidia did. Under Huang, infrastructure companies needing $100 million to $500 million in GPUs would often raise half that at valuations of $1 billion or more from Nvidia, with its participation giving other investors comfort.
Few believe Nvidia's investment slowdown alone will halt the broader AI boom. Amulya Vishwanath, a former Nvidia employee who now runs a venture fund, said founders and leaders must be held accountable and that the ecosystem is bigger than one person.
Nvidia shares were down 2.01% in delayed trading at $162.85.