Jensen Huang's Nvidia exit leaves hole in AI startup funding, investors warn

Jensen Huang, who co-founded Nvidia and led the company for 33 years, has stepped down as CEO, and investors say the move strips one of the biggest single sources of capital out of the AI startup ecosystem. According to TechCrunch, which spoke with venture capitalists and founders after the resignation, reactions ranged from shock to foreboding, with one neocloud founder comparing the news to a bomb going off.

A prolific investor, not just a chipmaker

Nvidia has poured tens of billions of dollars into startups annually in recent years, and PitchBook data cited by TechCrunch shows it participated in 105 funding rounds this year alone, frequently as the largest investor. Maria Davidson, founder of Relational Capital, warned that any change in that direction would be a serious blow to young companies.

Shamilla Bankiya of Dawn Capital put it more bluntly, telling TechCrunch that Nvidia is "carrying almost every AI-native startup from application to neocloud."

Umesh Padval, managing partner at Seligman Ventures, said most of the significant startup investment decisions came from Huang personally. Padval has known Huang since serving on the board of Mellanox, the networking chipmaker Nvidia acquired for roughly $7 billion in 2020. Investors hope a permanent successor will eventually resume that dealmaking pace, but few expect it in the short term.

A more conservative interim leader

Interim CEO Colette Kress is expected to overhaul Nvidia's approach to startup investing, particularly in AI companies at the centre of the multibillion-dollar data centre build-out — an area where Huang's aggressive spending had already drawn concern on Wall Street. One investor described Kress as much more conservative and said they doubt she will commit comparable sums to keeping the early-stage ecosystem afloat.

Nvidia's biggest bets went to neoclouds, inference providers and open-weight model developers — infrastructure that is expensive for smaller companies to build. Zain Javid, co-founder of the hardware company Ghost, credited Huang's initiatives with creating an ecosystem despite those costs.

The scale of the portfolio

TechCrunch points to concrete examples of the strategy: Nvidia backed CoreWeave while it was still private, joined two of Crusoe's rounds including its $1.4 billion Series E, and agreed to acquire Hugging Face this year for $13 billion in a deal expected to close in 2027. It also holds investments in Mistral AI, Lambda and Black Forest Labs. Last year it wrote an $800 million check into a $2 billion Series B for Reflection AI before the open-source startup had meaningful revenue, according to the Wall Street Journal.

Bankiya also highlighted Huang's support for open source and for European companies, arguing that if that backing disappears outside the US, the resulting funding and ecosystem gap would be impossible for anyone else to fill.

An opening for rivals

Nvidia's dominance also had a monopolistic quality. By writing generous checks to so many companies, it effectively locked those startups into using its chips, reinforcing its market position. A more restrained investment posture could open space for competitors, and TechCrunch notes that Google announced two new chips the same week.

Dharmesh Thakker, general partner at Battery Ventures, expects big tech rivals to compete for Nvidia's investment crown, depending on who can combine a strong product, an ecosystem and community capable of rivaling CUDA, and the financial power to bankroll it. But while 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 companies the way Nvidia did.

That matters because Nvidia's participation signalled safety to the rest of the market. Under Huang, one VC told TechCrunch, infrastructure companies needing $100 million to $500 million in GPUs would often raise roughly half that amount from Nvidia at valuations of $1 billion or more, and other investors followed. Nvidia is now expected to be more selective with new investments and write smaller checks to existing portfolio companies, contributing to a drop in valuations. As Padval put it, when Nvidia was on the cap table, everyone felt safe — and without it, traditional VCs may pause or reconsider deals entirely.

Why it matters

Nvidia's startup investments were never purely financial: they functioned as a de-risking mechanism for the entire AI infrastructure funding stack. Huang's exit could compress valuations across the sector, starve pre-revenue infrastructure startups of capital, and hand rivals like Google, AMD, Amazon and Microsoft a chance to build competing ecosystems. That said, few people TechCrunch spoke to believe the slowdown alone will stop the broader AI boom. Amulya Vishwanath, a former Nvidia employee who now runs her own VC fund, argued that founders and leaders must be held accountable, that the ecosystem is bigger than any one person, and that the talent behind it will continue to thrive.