Jensen Huang's Exit Tears a Hole in AI Startup Funding

Nvidia participated in 105 startup funding rounds this year alone, often as the largest investor, according to PitchBook. Jensen Huang's resignation as CEO after 33 years puts that machine in doubt. "It's like a bomb went off," one neocloud founder told TechCrunch on hearing the news.

The company has poured tens of billions into startups annually in recent years. Investors and founders now expect that flow to slow under interim CEO Colette Kress, and the consequences could reach dealmaking, valuations and competition across the AI sector.

How much of the ecosystem leaned on Nvidia?

A great deal, by the accounts of investors TechCrunch spoke with. "Nvidia is carrying almost every AI-native startup from application to neocloud," said Shamilla Bankiya of Dawn Capital.

Maria Davidson, founder of Relational Capital, put it bluntly: "If that direction changes, it'll be a big blow to so many young companies."

Most significant investment decisions came from Huang personally, according to Umesh Padval, managing partner at Seligman Ventures. Padval has known Huang since serving on the board of Mellanox Technologies, the networking chipmaker Nvidia acquired for roughly $7 billion in 2020. Investors hope Huang's eventual successor will resume his dealmaking. Few expect that soon.

What changes under Colette Kress?

Kress is expected to tighten Nvidia's startup investments, which sit at the center of the billion-dollar data centre build-out. Wall Street had voiced concern over Huang's aggressive dealmaking.

"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 targeted neoclouds, inference providers and open weight models — categories too expensive for small companies to build alone. "Jensen's initiatives are a big reason an ecosystem has emerged despite that," said Zain Javid, co-founder of hardware company Ghost.

Where did the money go?

The portfolio was broad and, at times, dominant.

• Nvidia backed CoreWeave while it was still private and joined two Crusoe rounds, including its $1.4 billion Series E.
• It agreed to buy Hugging Face this year for $13 billion, with closing expected in 2027.
• It holds stakes in Mistral AI, Lambda and Black Forest Labs.
• It wrote an $800 million check into a $2 billion Series B for Reflection AI before that open-source startup earned meaningful revenue, per the Wall Street Journal.

That generosity had a strategic edge. By backing so many companies with large checks, Nvidia effectively locked startups into using its chips and reinforced its dominant market position. At times, investors say, it felt like a monopoly.

Who fills the gap?

Bankiya warned the retreat would bite hardest outside America. "Jensen believed in open source and frankly speaking, Europe," she said. Losing that support would leave "a massive funding and honestly ecosystem gap that no one can fill."

Google, coincidentally, announced two new chips this week amid Nvidia's turmoil. Dharmesh Thakker, general partner at Battery Ventures, 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 doubts they will match Nvidia's appetite. Google, Amazon, Microsoft and AMD may back mature startups to drive adoption of their chips and clouds. Pre-revenue infrastructure startups are another matter. Thakker does not believe those rivals will pour hundreds of millions into them the way Nvidia did.

What happens to valuations?

They are likely to fall. Nvidia is expected to be more selective with new bets and to write smaller checks into its existing portfolio.

The effect is already visible in how other investors behaved. Under Huang, infrastructure companies needing $100 million to $500 million in GPUs would often raise half that sum from Nvidia at valuations of $1 billion or more, one VC said. Nvidia's participation gave other investors comfort at those lofty numbers.

"When Nvidia was on the cap table, everyone felt safe," Padval said. Without it, traditional VCs will likely think twice and may pause certain deals.

Still, few believe Nvidia's slowdown alone will halt the broader AI boom. Amulya Vishwanath, a former Nvidia employee who now runs her own VC fund, argued the ecosystem is bigger than one person. "Founders and leaders must be held accountable," she said. "That talent will, and must, continue to thrive."

Nvidia has not said when a permanent CEO will be named, so the size and pace of its future startup checks remain an open question.