The news reverberated around the globe: Jensen Huang, the CEO who had co-founded Nvidia and steered it for 33 years, had officially resigned. In recent years, Nvidia had become an extraordinarily active investor, channeling tens of billions of dollars into startups annually. According to PitchBook, the company participated in 105 funding rounds this year alone, frequently as the largest investor.

"If that direction changes, it'll be a big blow to so many young companies," warned Maria Davidson, founder of Relational Capital. Investors say Huang's departure leaves the startup ecosystem without one of its most significant champions—and with considerably less capital available for the time being. The consequences could be far-reaching, affecting dealmaking, valuations, funding, and even competition.

According to Umesh Padval, managing partner at Seligman Ventures, most of the major decisions to invest in startups came directly from Jensen himself. Padval has known Huang since his time on the board of Mellanox Technologies, a networking chipmaker that Nvidia acquired for approximately $7 billion in 2020. While there is hope that Huang's eventual successor will continue his aggressive dealmaking, investors aren't optimistic that this will happen anytime soon.

Nvidia's interim CEO, Colette Kress, is expected to implement some changes—particularly regarding Nvidia's investments in AI startups at the heart of the billion-dollar data centre build-out. Huang's prolific dealmaking in this area had been a source of concern for Wall Street. "She's much more conservative," one investor remarked about Kress. "I don't think she's going to commit the same amount of money to keep the early-stage ecosystem going."

Nvidia's most significant bets involved backing neoclouds, inference providers, and open weight models—areas that are expensive for smaller companies to develop. "Jensen's initiatives are a big reason an ecosystem has emerged despite that," said Zain Javid, co-founder of the hardware company Ghost.

For instance, Nvidia backed CoreWeave when it was still private and participated in two of Crusoe's rounds, including its $1.4 billion Series E. It acquired Hugging Face this year for $13 billion (expected to close in 2027) and holds investments in Mistral AI, Lambda, and Black Forest Labs. Nvidia was often the largest investor in these deals. Last year, according to the Wall Street Journal, it wrote an $800 million check into a $2 billion Series B round for Reflection AI, before the open-source startup began to earn meaningful revenue.

"Jensen believed in open source and frankly speaking, Europe," Bankiya said, describing how Huang invested so heavily in AI across the world. The cessation of that support in regions outside of America, such as Europe, "would be a massive funding and honestly ecosystem gap that no one can fill."

It's also true that Nvidia was such a dominant player in the ecosystem that at times, it felt like a monopoly. By backing so many companies with such generous checks, Nvidia effectively locked those startups into using its chips, which helped reinforce its dominant market position. If the company does grow more conservative with its startup investments, that could leave more room for rivals and smaller competitors. (Coincidentally, Google announced two new chips this week amid Huang's Nvidia fallout.)

Dharmesh Thakker, a general partner at Battery Ventures, for example, expects big tech rivals to vie for Nvidia's investment crown, "depending upon who brings the best combination of a great product, an ecosystem and community to compete with CUDA, and the financial power to bankroll the ecosystem," he said. CUDA is Nvidia's software platform that enables developers to run AI models on its GPUs.

While companies like 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 startups the way Nvidia did. Under Huang, infrastructure companies that needed $100 million to $500 million in GPUs would often raise half of that amount at valuations of $1 billion or more from Nvidia just to get started, one VC said. The chipmaker's participation gave other investors the comfort to back these companies at the lofty valuations.

Now, Nvidia is expected to be more selective in the new companies it backs, while writing smaller-sized checks into its existing portfolio, contributing to a drop in valuations. "When Nvidia was on the cap table, everyone felt safe," Padval said. Without that backing, investors say traditional VCs are likely to think twice before writing checks into these startups and may even pause certain dealmaking.

Even so, few believe that Nvidia's investment slowdown will by itself halt the broader AI boom. Though everyone agrees that Huang is a massive loss for Nvidia, one of his ex-employees, Amulya Vishwanath, who now runs her own VC fund, said that "founders and leaders must be held accountable," and that the ecosystem is bigger than one person. "That talent will, and must, continue to thrive."