Jensen Huang's exit from Nvidia leaves AI startups facing a funding gap, investors and founders tell TechCrunch

What happened

Jensen Huang has officially stepped down as CEO of Nvidia, TechCrunch reported Friday. Huang co-founded the company and led it for 33 years. Venture capitalists and founders who spoke with the outlet said his exit could leave a large hole in funding for artificial intelligence startups.

"It's like a bomb went off," one neocloud founder told TechCrunch. Colette Kress is now Nvidia's interim CEO, and our earlier report on Nvidia's interim leadership covers that change.

Why Nvidia matters to AI startups

A prolific investor

TechCrunch cited PitchBook data showing that Nvidia has put tens of billions of dollars into startups each year. It took part in 105 funding rounds this year alone, often as the largest investor. Umesh Padval, managing partner at Seligman Ventures, told the outlet that most major startup investment decisions often came from Huang himself.

Where the money went

Nvidia's biggest bets went to neoclouds, inference providers and open weight models, TechCrunch reported. These are expensive for smaller companies to build. Nvidia backed CoreWeave while it was still private and joined two of Crusoe's rounds, including its $1.4 billion Series E. It also holds investments in Mistral AI, Lambda and Black Forest Labs.

Nvidia agreed this year to buy Hugging Face for $13 billion, a deal expected to close in 2027. Citing the Wall Street Journal, TechCrunch reported that Nvidia put $800 million into a $2 billion Series B round for Reflection AI last year. That was before the open source startup was earning meaningful revenue.

Dawn Capital's Shamillah Bankiya said Huang "believed in open source and frankly speaking, Europe." She warned that if that support ended in regions outside America, it would leave a gap no one could fill.

What could change under new leadership

A more cautious approach expected

Kress is expected to make some changes, TechCrunch reported. Those changes would especially affect Nvidia's investments in AI startups tied to the data center build-out, an area where Huang's dealmaking had worried Wall Street. "She's much more conservative," one investor told the outlet.

Investors said they hope Huang's eventual successor will resume his dealmaking, but they are not hopeful it will happen in the short term. Nvidia is expected to be more selective about new companies and to write smaller checks into its existing portfolio. Investors said this is contributing to a drop in valuations.

Pressure on startup valuations

Under Huang, infrastructure companies that needed $100 million to $500 million in GPUs would often raise half that amount from Nvidia just to get started, one VC told TechCrunch. Those raises often came at valuations of $1 billion or more. Nvidia's participation gave other investors comfort in backing these companies.

"When Nvidia was on the cap table, everyone felt safe," Padval said. Without that backing, investors told the outlet, traditional VCs may think twice before investing and may even pause some deals.

Room for rivals

TechCrunch noted that Nvidia was so dominant in the startup ecosystem that at times it felt like a monopoly. Its large checks effectively locked startups into using its chips. A more conservative Nvidia could leave more room for rivals and smaller competitors. Google announced two new chips this week, the outlet reported.

Dharmesh Thakker, a general partner at Battery Ventures, expects Big Tech rivals to compete to replace Nvidia as the leading startup investor. He said companies such as Google, Amazon, Microsoft and AMD may back mature startups to drive adoption of their chips and clouds. However, he doubts they will put hundreds of millions into pre-revenue infrastructure startups the way Nvidia did.

Few investors believe the slowdown alone will halt the broader AI boom, TechCrunch reported. Amulya Vishwanath, a former Huang employee who now runs her own VC fund, said "founders and leaders must be held accountable." She added that the ecosystem is bigger than one person. More coverage is in our AI and tech section.

What to watch next

• Changes interim CEO Colette Kress is expected to make to Nvidia's startup investments, especially those tied to the data center build-out.
• Whether Huang's eventual successor resumes his dealmaking, which investors told TechCrunch is unlikely in the short term.
• Whether large cloud companies and other chipmakers step in to back startups and fill the funding gap.
• Nvidia's $13 billion purchase of Hugging Face, which is expected to close in 2027.