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How did NVIDIA invest?

Release Time:2024-02-19

As a global leader in GPU technology, NVIDIA not only limited its vision to the hardware field, but also set up a venture capital department, NvAdventures, to enter the venture capital market and deepen its influence in the AI industry.

Nventures was established in early 2022, and its investment scope covers many fields such as health, enterprise and logistics. Among them, NVIDIA focused on investing in top start-ups in the AI field (such as Cohere, etc.), and thus stood out among a number of technology giants.

NVIDIA has incomparable advantages over traditional venture capital companies. It not only provides funds for start-ups, but also pays more attention to technical support and resource sharing, including high-performance computing resources, technical expertise and in-depth understanding of the AI field, so as to build the long-term strategic value of enterprises. In addition, NVIDIA CEO Huang Renxun's personal participation and guidance became the "bright spot" of his venture capital.

Analysts believe that although NVIDIA is currently in a leading position in the technology industry, in Silicon Valley, industry change is the norm. Once brilliant companies such as Yahoo, MySpace and even AMD, the former employer of NVIDIA CEO Huang Renxun, were once giants in the technology industry. However, over time, they have been surpassed by emerging technologies and competitors.

If NVIDIA's GPU is no longer dominant in the future, NVIDIA may think that investing in start-ups is a forward-looking investment strategy, so as to diversify its business and maintain its competitiveness. The three founders of Nventures Portfolio Company told the media that they thought NVIDIA's investment strategy might be based on such considerations.

NVIDIA surpasses the advantages of traditional venture capital.

1) Technical support and resource sharing: NVIDIA's investment strategy is not only to provide funds, but also to pay attention to technical support and resource sharing.

Due to its deep accumulation of technology and leading position in AI field, NVIDIA can provide technical support, professional knowledge sharing, market orientation, strategic planning and connection with NVIDIA's extensive technology and business ecosystem for investment companies. These are the incomparable advantages of traditional venture capital companies.

Such cooperation enables start-ups (such as Terray Therapeutics) to make direct use of high-performance computing resources in NVIDIA, get in touch with technical experts in NVIDIA, and get direct guidance from CEO Huang Renxun and important brand endorsement.

Sid Siddeek, vice president of NVIDIA and head of Nventures, stressed in an interview with the media that NVIDIA's investment strategy is diversified, aiming at promoting the growth of start-ups by providing financial, technical and professional support. Siddeek also pointed out that another major goal is to ensure that these investments can bring positive financial returns to NVIDIA.

2) NVIDIA CEO Huang Renxun's personal participation and guidance is very attractive to start-ups.

NVIDIA's internal corporate culture emphasizes efficiency and cooperation. This culture is reflected in the support for internal projects and portfolio companies. It is reported that the founders of NVIDIA's portfolio companies mentioned that they could get the answer to the problem quickly from NVIDIA.

For example, Outlider is a company that focuses on automated freight and logistics. Bob Hall, Chief Technology Officer of Outlider, pointed out that the internal staff in NVIDIA responded very quickly to the help request of the Nventures team, which greatly promoted the development of their company.

Besides responding very quickly, Huang Renxun's direct guidance also helps enterprises to make rapid progress. For some companies, such as Imbue and Utilidata, Huang Renxun participated in the solicitation process and personally met the founders. Qiu, CEO of Imbue, said that Huang Renxun has been easy to contact since then. She once sent an email to Huang Renxun asking how the company should set the salary for its senior management team, and Huang Renxun responded quickly.

Huang Renxun's participation not only reflects NVIDIA's emphasis on investment projects, but also sends a strong signal to start-ups, that is, they will be able to directly benefit from the experience and insights of NVIDIA's leadership.

However, this opportunity is not equally available to all portfolio companies. Some founders of portfolio companies said that they had never met Huang Renxun. Siddeek mentioned that Huang Renxun is very busy, but he still leads the investment committee that approves every transaction. According to media reports, when asked about Huang Renxun's criteria for meeting with the founder during the transaction, NVIDIA chose not to comment.

NVIDIA's investment covers top AI startups.

1) Scope of investment: Siddeek mentioned that NVENTERES has made a number of investments in the new year, and the NVENTERES website has been launched recently, which indicates that NVIDIA has formally and actively participated in the field of venture capital.

According to public information, since the beginning of 2023, NVIDIA has announced 14 investments, covering many fields such as health, enterprise and logistics. NVIDIA not only pays attention to AI technology itself, but also applies AI technology to many industries to solve specific problems.

Among them, NVIDIA has invested in top start-ups in the AI field, such as Cohere, Hugging Face and Influence. NVIDIA is an emerging player in the field of venture capital. It stands out among the technology giants such as Alphabet, Microsoft and Salesforce by investing in top AI startups in a short time.

2) Fair and transparent cooperative relationship: Although start-ups may expect special preferential treatment, NVIDIA treats all customers and portfolio companies equally and does not provide special access rights.

NvAdNventuress, a venture capital department in NVIDIA, made it clear to the media that it would not provide priority access to GPUs because of its investment relationship. In the current field of artificial intelligence, companies are competing to develop the most powerful AI model, which makes GPUs a new "currency". Nevertheless, NVIDIA does not provide a special way to acquire chips just because the company has an investment relationship with it.

Jorge Torres, CEO of MindsDB, a startup company, mentioned that although being a member of NVIDIA's portfolio does not mean getting any special preferential treatment (so-called "VIP pass"), this cooperative relationship does bring positive effects to MindsDB, such as improving brand awareness, obtaining technical guidance or broadening business network.

In addition, the founders of NVIDIA and its portfolio companies all said that for start-ups, there is no requirement or designation that they must use their investment capital to buy chips or other products in NVIDIA. NVIDIA's investment is more based on the trust in the technology and business potential of the invested company, rather than to promote its own products or services.

3) Financial strength supports investment activities

According to Omdia, a research company, NVIDIA accounts for over 70% of the AI chip sales market, and NVIDIA's strong financial strength provides a solid foundation for its investment activities. The company's revenue in the first three quarters reached $38.82 billion, especially in the third quarter, its sales increased by more than 200% year-on-year. NVIDIA's market value also rose rapidly to $1.79 trillion, making it the third largest company in the US stock market. This enables Nvidia to use its own funds to invest in start-ups.

Risk warning and exemption clause

The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.

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