Investors Fear Huang's Exit Will Cut Nvidia's Startup Funding and Push Valuations Down

Nvidia has been among the most active backers of AI startups. PitchBook data cited by TechCrunch shows it took part in 105 funding rounds this year, often as the largest investor. Crunchbase, which counts deals differently, put the figure at a record 121. Several investors said the biggest decisions usually came from Huang himself. That leaves companies that relied on Nvidia's money without their most important supporter while the board looks for a permanent successor.

The concern centres on Colette Kress, Nvidia's longtime finance chief, who is now interim chief executive. "She's much more conservative," one investor said of Kress. "I don't think she's going to commit the same amount of money to keep the early-stage ecosystem going." Wall Street had already been uneasy about how much Huang was investing in companies that buy Nvidia chips to build data centres.

Umesh Padval, managing partner at Seligman Ventures, has known Huang since serving on the board of Mellanox, which Nvidia bought in 2020. He said Nvidia's presence had reassured other investors. "When Nvidia was on the cap table, everyone felt safe," he said. Without it, investors said, traditional venture firms are likely to hesitate before backing these companies, and some may pause deals altogether.

The Model It Supported

Nvidia's largest bets went to neoclouds, inference providers and developers of open-weight models, all of which are expensive to build. It backed CoreWeave while that company was still private, joined two of Crusoe's rounds including a $1.4 billion Series E, and holds stakes in Mistral AI, Lambda and Black Forest Labs. This year it agreed to buy Hugging Face for $13 billion, a deal expected to close in 2027. Last year it put $800 million into a $2 billion Series B for Reflection AI before the open-source startup had meaningful revenue, according to the Wall Street Journal.

One venture investor described the pattern. Infrastructure startups that needed $100 million to $500 million in GPUs would often raise about half of that from Nvidia, at valuations of $1 billion or more, just to get going. Investors now expect Nvidia to be pickier about new companies and to write smaller cheques to existing ones, which would pull valuations down.

"Nvidia is carrying almost every AI-native startup from application to neocloud," said Shamilla Bankiya of Dawn Capital. She said Huang "believed in open source and frankly speaking, Europe". If that support outside the US stopped, she said, it "would be a massive funding and honestly ecosystem gap that no one can fill."

Who Might Fill the Gap

Investors also noted that Nvidia's generous funding tied its portfolio companies to its chips and strengthened its hold on the market. A pullback could leave more room for rivals. Dharmesh Thakker, a general partner at Battery Ventures, expects large technology companies to compete for Nvidia's role as the sector's leading investor. He doubts, though, that Google, Amazon, Microsoft or AMD would put hundreds of millions of dollars into pre-revenue infrastructure startups the way Nvidia did. More likely, he said, they would back mature companies to win customers for their own chips and clouds.

Few of the people TechCrunch spoke to expect a slowdown at Nvidia to stop the wider AI boom on its own. Amulya Vishwanath, a former Nvidia employee who now runs her own venture fund, said "founders and leaders must be held accountable" and that the ecosystem is bigger than any one person.

The first official signal of Nvidia's approach under Kress could come on Tuesday, when the company reports quarterly results. Its board has said it has not yet hired a search firm or formally approached candidates for the permanent role.