Jensen Huang stepped down as Nvidia’s chief executive, ending a 33-year tenure as co-founder and leader. The move has sent shockwaves through the venture capital community.
One neocloud founder told TechCrunch the announcement felt like a bomb going off. Nvidia has poured tens of billions into startups over recent years, participating in 105 investment rounds this year alone, often acting as the largest backer according to PitchBook.
Maria Davidson, founder of Relational Capital, warned that any change in direction would deal a heavy blow to young companies. Investors say the ecosystem now lacks a major champion and faces a shortage of capital. This shift could impact dealmaking, valuations, funding levels, and competition.
Shamilla Bankiya of Dawn Capital told TechCrunch that Nvidia supported almost every AI-native startup, from application builders to neocloud operators.
Umesh Padval, managing partner at Seligman Ventures, noted that most significant investment decisions came directly from Huang. Padval has known him since serving on the board of Mellanox Technologies, a networking chipmaker Nvidia acquired for around $7 billion in 2020. While there is hope a successor will continue the dealmaking, investors do not expect it to happen soon.
Colette Kress, Nvidia’s interim CEO, is expected to make changes, particularly regarding investments in the billion-dollar data centre build-out. Huang’s aggressive dealmaking in this area has worried Wall Street.
One investor described Kress as much more conservative. They do not believe she will commit the same funds to keep the early-stage ecosystem running.
Nvidia’s largest bets backed neoclouds, inference providers, and open weight models. These are expensive for smaller companies to build. Zain Javid, co-founder of the hardware company Ghost, said Huang’s initiatives were a major reason an ecosystem emerged despite the costs.
Nvidia backed CoreWeave while it was still private and participated in two rounds for Crusoe, including its $1.4 billion Series E. It bought Hugging Face this year for $13 billion, with the deal expected to close in 2027. The company also holds investments in Mistral AI, Lambda, and Black Forest Labs. Nvidia was often the largest investor in these deals.
Last year, it wrote an $800 million check into a $2 billion Series B round for Reflection AI, before the open-source startup began earning meaningful revenue, according to the Wall Street Journal.
Bankiya said Huang believed in open source and Europe. The cessation of support in regions outside America, such as Europe, would create a massive funding and ecosystem gap that no one can fill.
Nvidia was such a dominant player that at times it felt like a monopoly. By backing many companies with generous checks, it effectively locked those startups into using its chips, reinforcing its market position.
If the company grows more conservative with startup investments, it could leave room for rivals and smaller competitors. Google announced two new chips this week amid the news.
Some investors hope large cloud companies and other chipmakers will step in to back startups and fill the void left by Huang.
Dharmesh Thakker, a general partner at Battery Ventures, expects big tech rivals to vie for Nvidia’s investment crown. He said this depends on who brings the best combination of product, ecosystem, community to compete with CUDA, and the financial power to bankroll the ecosystem.
CUDA is Nvidia’s software platform that enables developers to run AI models on its GPUs.
While companies like Google, Amazon, Microsoft, and AMD may back mature startups to drive adoption of their chips and clouds, Thakker 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 amount at valuations of $1 billion or more from Nvidia just to get started. The chipmaker’s participation gave other investors comfort in backing these companies at lofty valuations.
Now, Nvidia is expected to be more selective in new companies it backs, while writing smaller checks into its existing portfolio. This contributes to a drop in valuations.
Padval said that when Nvidia was on the cap table, everyone felt safe. Without that backing, traditional VCs are likely to think twice before writing checks into these startups and may even pause certain dealmaking.
Even so, few believe Nvidia’s investment slowdown will by itself halt the broader AI boom.
Though everyone agrees Huang is a massive loss for Nvidia, Amulya Vishwanath, who now runs her own VC fund, said founders and leaders must be held accountable. She added that the ecosystem is bigger than one person and that talent will, and must, continue to thrive.
