Huang's exit from Nvidia leaves a gap in AI startup funding, investors say

Jensen Huang has resigned as CEO of Nvidia, and venture investors and startup founders say his departure will leave a large hole in AI startup funding. TechCrunch reported that Huang co-founded the company and led it for 33 years. One founder in the neocloud sector described the news as being like a bomb going off.

Nvidia has been one of the most active backers of young AI companies. According to PitchBook, it took part in 105 funding rounds this year alone, often as the largest investor. Maria Davidson, founder of Relational Capital, warned that a change in direction would be a big blow to many early-stage companies. Investors told TechCrunch the shift could affect dealmaking, valuations, funding and competition.

Umesh Padval of Seligman Ventures said many of the major startup investment decisions came from Huang himself. Investors hope his eventual successor will return to heavy dealmaking, but they do not expect that soon. Colette Kress, the interim CEO, is expected to change how Nvidia invests in AI startups tied to the data center build-out, an area where Huang's pace of deals had worried Wall Street. One investor called her much more conservative.

Nvidia's biggest bets were on neoclouds, inference providers and open-weight models, which cost smaller companies a lot to build. It backed CoreWeave before the company went public and joined two Crusoe rounds, including a $1.4 billion Series E. It also agreed to buy Hugging Face for $13 billion this year, with closing expected in 2027, and holds stakes in Mistral AI, Lambda and Black Forest Labs. The Wall Street Journal reported that Nvidia put $800 million into a $2 billion Series B for Reflection AI last year.

Investors also fear a gap outside the United States. Shamillah Bankiya of Dawn Capital said Huang believed in open source and in Europe, and that losing that support there would leave a gap no one else can fill.

Under Huang, one VC said, an infrastructure startup needing $100 million to $500 million in GPUs could raise about half from Nvidia at a valuation of $1 billion or more. That gave other investors confidence to join. Nvidia is now expected to pick new investments more carefully and write smaller checks to existing portfolio companies, which could pull valuations down. Padval said everyone felt safe when Nvidia was on the cap table, and traditional VCs may now pause some deals.

The stakes also have a competitive side. Nvidia's generous funding tended to tie startups to its chips and reinforced its dominant position, so a more cautious approach could leave room for rivals. TechCrunch noted that Google announced two new chips this week. Dharmesh Thakker of Battery Ventures expects Big Tech competitors to vie to replace Nvidia as top backer, but he doubts that Google, Amazon, Microsoft or AMD will put hundreds of millions into pre-revenue infrastructure startups.

Few investors think a slowdown in Nvidia's investing will on its own end the broader AI boom. Amulya Vishwanath, a former Nvidia employee who now runs a VC fund, said the ecosystem is bigger than one person and that its talent must keep thriving.