Jensen Huang’s departure blasts big hole in AI startup funding, VCs and founders say

Summary

• Jensen Huang officially stepped down as Nvidia's CEO after 33 years leading the company.
• Nvidia invested tens of billions into startups annually, participating in 105 rounds this year alone, often as the largest investor.
• Huang's departure leaves the startup ecosystem without a major champion & reduces available capital for dealmaking, valuations, funding, & competition.
• Most significant investment decisions were made by Huang personally, with investors doubting his successor will resume the same pace in the short term.
• Interim CEO Colette Kress is expected to institute changes & adopt a more conservative approach to AI startup investments.
• Nvidia previously backed neoclouds, inference providers, & open weight models, including CoreWeave, Crusoe, Hugging Face, Mistral AI, Lambda, & Black Forest Labs.
• Nvidia wrote an $800 million check into a $2 billion Series B round for Reflection AI last year before the startup earned meaningful revenue.
• Huang's support extended to Europe & open source initiatives, creating a potential funding gap in regions outside America if that support ceases.
• Nvidia's dominant investment position effectively locked startups into using its chips, reinforcing its market dominance.
• A shift toward more conservative investing could create room for rivals & smaller competitors, coinciding with Google announcing two new chips.
• Investors hope large cloud companies & chipmakers like Google, Amazon, Microsoft, & AMD will step in to back startups, though they may not fund pre-revenue infrastructure at the same scale.
• Under Huang, infrastructure companies often raised half their GPU needs from Nvidia at valuations of $1 billion or more, which comforted other investors.
• Nvidia is expected to be more selective in new investments & write smaller checks to existing portfolio companies, contributing to a drop in valuations.
• Few believe Nvidia's investment slowdown will halt the broader AI boom, & some argue the ecosystem is bigger than one person.