Jensen Huang's exit blows a billion-dollar hole in AI startup funding

Jensen Huang, who co-founded Nvidia and ran it for 33 years, is out as CEO. One neocloud founder told TechCrunch the news landed like a bomb going off. Colette Kress has stepped in as interim CEO, and investors expect her to run the company's startup spending very differently from the man who personally green-lit most of the big deals.

The scale of what's at stake is huge. Nvidia has poured tens of billions into startups annually and joined 105 rounds this year alone, often writing the largest check, according to PitchBook. Umesh Padval, managing partner at Seligman Ventures, said most major investment calls came straight from Huang — Padval has known him since sitting on the board of Mellanox Technologies, the networking chipmaker Nvidia bought for roughly $7 billion in 2020.

Nvidia's biggest bets went to neoclouds, inference providers and open weight models. It backed CoreWeave while the company was still private, joined two Crusoe rounds including a $1.4 billion Series E, and holds stakes in Mistral AI, Lambda and Black Forest Labs. It agreed to buy Hugging Face this year for $13 billion, a deal expected to close in 2027, and the Wall Street Journal reported it wrote an $800 million check into a $2 billion Series B for Reflection AI before the open-source startup had meaningful revenue.

That appetite is what worries founders. Dawn Capital's Shamilla Bankiya said Nvidia is carrying almost every AI-native startup from application to neocloud, while Maria Davidson of Relational Capital warned that any change in direction would be a big blow to young companies. One investor described Kress as much more conservative, doubting she will commit the same money to keep the early-stage ecosystem alive. Bankiya added that Huang's belief in open source and in Europe made him a rare backer outside the US — a gap she says no one else can fill.

Nvidia's dominance cut both ways: its generous checks effectively locked startups into its chips, reinforcing its market position. If it pulls back, rivals get room. Google announced two new chips this week, and Battery Ventures general partner Dharmesh Thakker expects big tech to fight for the investment crown — though he doubts Google, Amazon, Microsoft or AMD will sink hundreds of millions into pre-revenue infrastructure startups the way Nvidia did. One VC said infrastructure companies needing $100 million to $500 million in GPUs would routinely raise half that from Nvidia at valuations of $1 billion or more just to get started, a cushion that made other investors comfortable.

Few people think the slowdown alone kills the AI boom. Amulya Vishwanath, a former Nvidia employee who now runs her own VC fund, said founders and leaders must be held accountable and that the ecosystem is bigger than one person. The talent, she said, will and must continue to thrive.