Huang's Exit From Nvidia Raises Concerns Over AI Startup Funding
After Nvidia CEO Jensen Huang stepped down, investors and founders expect less capital to flow to AI startups. The chipmaker took part in 105 funding rounds this year.
Jensen Huang, the co-founder who led chipmaker Nvidia for 33 years, has officially resigned as chief executive. According to TechCrunch, investors and startup founders believe the move could sharply reduce the capital available to artificial intelligence (AI) startups, with consequences for dealmaking, valuations and competition.
Nvidia has been a prolific investor in recent years, putting tens of billions of dollars into startups annually. This year it joined 105 funding rounds, often as the largest investor, according to PitchBook. One founder of a neocloud company (a firm focused on renting out computing capacity) compared the news to a bomb going off.
A more cautious approach expected
Umesh Padval, managing partner at Seligman Ventures, said many of the major startup investment decisions came from Huang himself. Interim CEO Colette Kress is, in investors' view, more conservative and is expected to change how Nvidia invests, especially in AI startups tied to the data center build-out. Huang's heavy dealmaking in that area had already worried Wall Street.
Nvidia's largest bets were on neoclouds, inference providers and open weight models. It backed CoreWeave, took part in two Crusoe rounds including a $1.4 billion Series E, and this year agreed to buy Hugging Face for $13 billion, with closing expected in 2027. It also holds stakes in Mistral AI, Lambda and Black Forest Labs. Last year it put $800 million into a $2 billion Series B round for Reflection AI.
What it means for the market
Investors expect Nvidia to be choosier about new companies and to write smaller checks for its existing portfolio, which could push valuations down. Some hope large cloud companies and other chipmakers will fill the gap, but Dharmesh Thakker of Battery Ventures doubts they would commit hundreds of millions to pre-revenue infrastructure startups. A smaller Nvidia role could also leave more room for rivals.
Still, few believe the investment slowdown alone will halt the wider AI boom.
