Nvidia is the most valuable chipmaker in the world. It has invested heavily in AI start-ups to capitalize on its dominant position as a processor provider.
Nvidia, based in Silicon Valley, announced on Monday that it had invested “more than twenty” companies this year. These ranged from large AI platforms worth billions to smaller start-ups using AI in industries like healthcare or energy.
Dealroom, a company that tracks venture capital investment, estimates that Nvidia will participate in 35 deals by 2023. This is almost six times as many as last year.
According to Dealroom’s data, the chipmaker was the most active large-scale AI investor during a banner dealmaking year. It outpaced Silicon Valley’s biggest venture firms, such as Andreessen Horowitz, and Sequoia. This excludes small-scale accelerators such as Y Combinator, which place smaller bets.
Nvidia reported in its latest quarterly filings that it had invested $872mn in “non-affiliates” — a category which included NVentures, corporate deals, and other non-affiliated companies — over the nine months ended in October. This is more than 10x what it invested during the same period in 2013.
Mohamed Siddeek is the head of Nvidia’s dedicated venture arm NVentures.
Our technology is used by companies who rely on it or have built their business around it.. . I can’t recall a single instance where we invested in a business that didn’t use Nvidia’s products.”
Nvidia now has Inflection AI, Cohere and Corporate Development team as part of its portfolio. These are two of the most formidable rivals for OpenAI, ChatGPT’s maker.
Hugging Face is another investment, which was valued at $4.5bn by August. CoreWeave is a cloud computing infrastructure company that targets high-performance computing apps that use chips like Nvidia graphics processing units.
Mistral, a Paris-based AI startup that was valued this month at €2bn.
All of these companies use Nvidia products, be it its GPU chips or software.
Nvidia’s H100 GPU is one of the most popular products in Silicon Valley. The powerful processor allows creators of large language models — the platform behind “generative AI” applications such as ChatGPT – to train their systems faster than with traditional server chips.
Nvidia writes checks for tens or even hundreds of millions of dollars to invest. Siddeek stated that NVentures aimed to “generate a healthy return” on its investments while its corporate development could invest more strategically. The company invests with venture capital firms and also leads rounds.
Start-ups who accept investment from Nvidia hope to develop a stronger relationship with the company. One VC who invests with Nvidia said, “They are obviously a strategic partner. You want to be a top priority for them when they launch new chips.”
One investor said: “It is the smartest strategy to lock in the market. . . [Nvidia] knows the money will eventually come back.”
Nvidia denies that it asked start-ups for special terms to use its chips. Siddeek said, “We strive to be as investor-friendly as we can.” “We don’t have any specific conditions.”
Inflection AI, which in June launched a $1.3bn fundraising led by Nvidia and Microsoft with Bill Gates as a co-lead, boasts it has access 22,000 H100 graphics cards, thanks to its alliances CoreWeave and the chipmaker. CoreWeave announced late last year that it was one of the first companies to get H100 shipments. The cloud giants Amazon, Google, Microsoft, and Oracle were included.
Siddeek firmly refuted any claims that the group’s portfolio companies receive preferential access. He said: “We do not help anyone jump the queue.”