This is a departure that has captured global attention. NVIDIA (NVDA) Chief Executive Officer Jensen Huang, who has been mired in controversy and helmed the company as co-founder for 33 years, has now officially stepped down.
Umesh Padval, Managing Partner at Seligman Ventures, noted that the vast majority of NVIDIA's major startup investment decisions were essentially finalized by Huang himself. Padval previously served on the board of Mellanox Technologies and became acquainted with Huang through that role; NVIDIA acquired the networking chip maker for approximately $7 billion in 2020. While investors hope Huang's successor will eventually restart large-scale investments, there is little optimism that this will happen in the near term.
Interim CEO Colette Kress is expected to introduce some adjustments, particularly regarding investments in AI startups — a category of investment that sits at the heart of the multi-billion-dollar data center construction wave. Huang's aggressive investment approach in this area has been a central focus of Wall Street concerns. One investor described Kress this way: "She has a far more conservative style. I don't think she will deploy the same scale of capital to keep the early-stage startup ecosystem running."
NVIDIA holds an absolutely dominant position in the ecosystem, at times approaching a monopoly. By making large-scale investments in numerous companies, NVIDIA effectively locks these startups into using its own chips, further cementing its market advantage. If NVIDIA shifts toward a more conservative approach to startup investments, competitors and smaller players may gain more room to maneuver. (Coincidentally, during the period of Huang's departure controversy, Google released two new chips this week.)
Some investors interviewed by the media hope that major cloud providers and other chip companies will step in to invest and fill the funding gap that Huang's departure may leave behind. For example, Damesh Tacker, a General Partner at Battery Ventures, believes that Big Tech competitors will vie for NVIDIA's investment leadership position. "It depends on who can put together the best combination: quality products, an ecosystem and developer community that can rival CUDA, and the financial strength to support the entire ecosystem." CUDA is NVIDIA's software platform, on which developers rely to run AI models on NVIDIA GPUs. Companies like Google, Amazon, Microsoft, and AMD may invest in mature startups to drive adoption of their own chips and cloud services, but Tacker believes they will find it difficult to invest hundreds of millions of dollars into pre-revenue infrastructure startups the way NVIDIA has.
According to one venture capitalist, during the Huang-dominated era, infrastructure companies that needed $100 million to $500 million in GPU resources could often secure half the funding from NVIDIA, instantly achieving a valuation of $1 billion or even higher as a starting point. Once NVIDIA participated in a round, other investors felt emboldened to follow at high valuations. Now NVIDIA is expected to be more cautious when selecting new projects and to reduce the size of follow-on investments in portfolio companies, which would in turn push down overall valuations. Padval said: "As long as NVIDIA is on the cap table, everyone feels at ease." Investors say that without this endorsement, traditional venture capital firms will think twice before committing and may even pause some deals.
Even so, few believe that a slowdown in NVIDIA's investments alone could bring the entire AI boom to a halt. Everyone acknowledges that Huang's departure is a significant loss for NVIDIA. Amulya Vishwanath, a former employee who now runs her own venture capital fund, said: "Founders and managers need to take responsibility, but the startup ecosystem is far bigger than any one person. These talented people will certainly, and must, continue to grow."
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