The trillion-dollar chipmaker has done over two dozen deals, through its Nventures investing arm and corporate development team. Portfolio companies say the deal comes with intangibles, like access to research teams and even the company’s famous CEO.
When Terray Therapeutics, an AI biotech firm, first trained its artificial intelligence model Coati early last year, CEO Jacob Berlin thought the technology was “pretty good.” It was functional, but could be better.
That was before Nvidia, the trillion-dollar chipmaker, invested in the startup, which specializes in small-molecule drug discovery. After the investment, announced in November, Terray retrained the model entirely, armed with boosted computing resources and Nvidia’s engineering prowess. “We just saw much, much better performance,” Berlin told Forbes. “And we couldn’t have gotten there without the collaboration with Nvidia and their support.”
The revamping of the AI model illustrates the intangibles that come with having the world’s most valuable chipmaker on your cap table. That’s the case for more than two dozen companies that Nvidia has invested in over the last two years, through both its venture capital arm Nventures and broader corporate development team.
In Terray’s case, the X factor was access to Nvidia’s researchers and engineers, who know how to coax the most power out of the chip giant’s coveted GPUs, or graphics processing units, used for large-scale AI development. In other cases, it means getting a quick email response from CEO Jensen Huang, an increasingly more powerful figure in the tech industry, who leads the committee that signs off on Nvidia’s investments. And for many of the startups, it means getting the seal of approval of one of the most important companies of the ongoing AI frenzy.
“We invest broadly—in the broadest sense of the word,” Sid Siddeek, corporate vice president and head of Nventures, told Forbes. “Not just dollars, but expertise, technology, benefits, and all kinds of stuff.” He noted that one goal of the investments is “generating a healthy return for Nvidia, just like any financial investor.”
“We invest broadly—in the broadest sense of the word. Not just dollars, but expertise, technology, benefits, and all kinds of stuff.”
Many of the biggest companies in tech have their own venture capital vehicles, including Alphabet, Microsoft and Salesforce. But Nvidia is relatively new to the game, and can in some ways offer benefits beyond those of a traditional venture capital firm, portfolio companies said. The unit was founded in early 2022, months before the release of OpenAI’s ChatGPT—which was largely trained on Nvidia GPUs—touched off a wave in Silicon Valley bringing AI into the mainstream. Nvidia has been on a tear of investments ever since, including in A-list AI unicorns Cohere, Hugging Face and Inflection.
Ethan Pines for forbes
“There was this little thing called gen AI that got going,” Siddeek said. “You go from zero to like, whatever. It’s infinite growth from zero.” In December, the company said it had announced 14 investments since the beginning of 2023, in areas including health, enterprise and logistics. In one sign that things are still just ramping up, Nventure’s website only launched last month.
Nventures has already “done a couple” of investments in the new year, Siddeek told Forbes, though he declined to provide further details.
Forbes spoke to seven Nvidia portfolio companies, who declined to share specific terms of their deals with the chip giant. Some claimed to have gotten better access to Nvidia’s chips, right now the most sought-after resource in Silicon Valley, though they did so without sharing specifics. Others said they got no special treatment.
“A VIP pass would be a bit of an exaggeration, but it’s just a little bit better than if we didn’t have this relationship,” said Jorge Torres, CEO of MindsDB, a startup that allows developers to connect AI models to data sources.
Nventures told Forbes it doesn’t allow prioritized access to GPUs. As startups and tech giants alike compete in an arms race to train the most powerful AI models, GPUs have become a new form of currency. But that doesn’t mean Nvidia’s portfolio companies didn’t inquire during the deal making process, said Kanjun Qiu, CEO of Imbue AI, a startup that aims to develop artificial intelligence that can reason like humans. “We know we’re not going to get preferential access. Even though we were like ‘…will we get preferential access?’” Qiu said, laughing. Nvidia and multiple portfolio company founders said there were no requirements or earmarks for the startups to spend any of the capital on Nvidia chips or other products.
“A VIP pass would be a bit of an exaggeration, but it’s just a little bit better than if we didn’t have this relationship.”
Both Nventures and the corporate development team invest off of Nvidia’s balance sheet. It’s a good time to do it. Nvidia is the world’s leader when it comes to GPUs, accounting for more than 70% of AI chip sales, according to the research firm Omdia. In the first three quarters of last year, the company raked in $38.82 billion in revenue (Nvidia announces fourth quarter earnings at the end of the month). In the third quarter, sales were up more than 200% from the previous year. The result has been a stratospheric rise in market cap, spiking this week to $1.8 trillion. That makes it the fourth most valuable company in the world, ahead of Alphabet, Amazon and Meta.
Got a tip about Nvidia? Reach out securely to reporter Richard Nieva on Signal at 510.589.4118 or rnieva@forbes.com.
Another big draw of an Nvidia investment: Jensen Huang, Nvidia’s leather jacket-clad leader. When it comes to access to the CEO, experiences vary across portfolio companies. For some, like Imbue and Utilidata, a company that aims to use AI to remake the energy grid, Huang was part of the courting process, meeting personally with founders. He’s been accessible since, said Qiu, the Imbue CEO. When she emailed Huang once to ask a question about how a company should compensate its executives, he speedily sent a reply. “He’s pretty available. I try not to bother him that much, but he’s certainly available.”
Some portfolio company founders, on the other hand, said they’ve never met him. “You have to remember, Jensen has a lot of things to focus on,” Siddeek said. “I’m saying the obvious here.” He added, though, that Huang leads the investment committee that signs off on every deal. Nvidia declined to comment when asked about Huang’s criteria for meeting with founders during the dealmaking process.
Beyond Huang, founders said they’re able to get fast answers from Nvidia because they are portfolio companies. “It’s very clear that inside Nvidia, people respond very quickly to requests for help from the Nventures team,” said Bob Hall, CTO of Outrider, a company that specializes in autonomous freight and logistics. “So their access, and the importance that appears to be placed on Nventures internally at Nvidia, has just been a big boost for us.”
Nvidia may be on top of the tech industry right now, but new world orders are common in Silicon Valley (just ask Yahoo, MySpace, or Huang’s former employer, AMD). As other companies try to build viable alternatives to Nvidia’s chips, the company may be looking at its startup investments as a way to diversify its business in the event that Nvidia’s GPUs no longer command the market like they do today. Three founders of Nventures portfolio companies told Forbes they thought that might be the case.
“It’s very clear that inside Nvidia, people respond very quickly to requests for help from the Nventures team.”
“It’s going to be hard to displace Nvidia in the next few generations, but certainly there’s some really smart people who are going to make a run for it,” said one founder, who requested anonymity to speak candidly about Nvidia.
Siddeek conceded that from an investment standpoint, the company is looking ahead. “We’re looking for founders that really have a bold vision,” he said. “People who are looking at the world, not today, but five years from now, 10 years from now.”
Nvidia has a solid history of doing just that. Founded 30 years ago, originally set out to make video game graphics better with its processors. In the last several years, GPUs became useful for crypto mining, and Nvidia tilted its business in that direction. Most recently, of course, GPUs have become the driving engine in AI training.
The discovery was first made in 2009, after a cohort of Stanford professors including Andrew Ng, who would go on to co-found the Google Brain research lab, realized the efficient computational structure of GPUs could speed up training in machine learning. For Nvidia, it was partly a case of right-place-right-time, but the company’s success is also credited to Huang pulling the right levers to capitalize on the coming AI revolution.
“They have a very strong record, obviously, of being right when they pick verticals that they think are going to grow and take off for demand on their chips and their software,” said Terray’s Berlin. “They’re trying to grow another multi-billion dollar vertical for them.”
Alex Konrad, Iain Martin and Kenrick Cai contributed reporting.
NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.
Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.
“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”
Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.
Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.
Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.
Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.
In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.
The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.
And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
