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Nvidia, the world’s most valuable chipmaker, has become one of the most prolific investors in artificial intelligence startups this year as it seeks to capitalize on its position as the dominant supplier of AI processors.
Silicon Valley-based Nvidia said Monday it had invested in “more than two dozen” companies this year, from large new AI platforms valued at billions of dollars to smaller startups applying AI in sectors such as healthcare or energy.
According to estimates from Dealroom, which tracks venture capital investments, Nvidia participated in 35 deals in 2023, almost six times more than last year.
That made the chipmaker the most active large-scale investor in AI in a banner year for industry dealmaking, surpassing Silicon Valley’s largest venture capital firms such as Andreessen Horowitz and Sequoia, excluding small-scale accelerator funds such as Y Combinator, according to Dealroom. who place much smaller bets.
“Broadly speaking, this is the most important criterion for Nvidia [for making start-up investments] is relevance,” Mohamed Siddeek, head of dedicated venture arm NVentures, told the Financial Times.
“Companies that use our technology, that depend on our technology, that build their business on our technology. . . I can’t think of a situation where we invested in a company that wasn’t using Nvidia products.”
Between NVentures and its business development team, Nvidia’s portfolio now includes Inflection AI and Cohere, two of ChatGPT maker OpenAI’s biggest rivals.
Other investments include Hugging Face, a provider of data and tools for AI developers that was valued at $4.5 billion in August, and CoreWeave, a cloud infrastructure company focused on high-performance computing applications that rely on chips like Nvidia’s graphics processing units .
Its most recent investment was in Mistral, the Paris-based AI start-up that was valued at €2 billion this month.
The one thing the companies have in common is that they are all Nvidia customers, whether they use the GPU chips or the software.
Nvidia’s H100 GPU has become one of the most sought-after products in Silicon Valley this year. The powerful processor helps makers of ‘large language models’ – the underlying platform that powers ‘generative AI’ services such as ChatGPT – train their systems much faster than with traditional server chips.
Nvidia invests from its own balance sheet and writes checks amounting to tens of millions of dollars. NVentures sought to “generate healthy returns” on its investments, while its business development team could invest for more strategic purposes, Siddeek said. It both runs itself and co-invests with venture capital firms.
Some startups hope that accepting investments from Nvidia will bring a closer relationship with the group. “They are clearly a very strategic partner; you want to be a priority for them as they roll out new chips,” says a venture capital player who shares the investments with Nvidia.
Another investor added: “It’s the smartest go-to-market strategy to really lock down the market. . .[Nvidia]know that the money will eventually come back.”
Nvidia denied that it sought special terms from startups to ensure they used the chips. “We try to be as investor-friendly as possible,” says Siddeek. “We don’t necessarily have conditions.”
Inflection AI — which announced a $1.3 billion fundraising round in June co-led by Nvidia, Microsoft, Bill Gates and others — claims it has access to 22,000 H100 GPUs, thanks to its alliances with the chipmaker and CoreWeave. Late last year, CoreWeave said it was one of the first companies to receive H100 shipments, joining cloud giants Amazon, Google, Microsoft and Oracle.
Siddeek denied that the group’s portfolio companies get preferential access to its chips. “We’re not helping anyone get ahead of themselves,” he said.