Nvidia was in 1 in 11 startup rounds over $100M last year
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Is this leaving good companies unfunded because they're not sufficiently "AI"?
Just the sheer size of investment into a single idea should worry people. Diversity is very important.
In what way is building homes competing for the same dollars as investing in startups or in listed companies?
If AI didn't have the hype, those marginal investment dollars driving up AI stock prices, they'd be flowing in to other uses of the capital, some of which I believe would be far more productive.
Isn't the healthier option that people who want homes get them built? You don't need a general investor in that loop, except if we're talking bout "mass housing" but even then, those are generally property developers and they are unlikely to use those dollars for non-property development.
Most people don't want to be their own builder. All of society is set up in the US to prevent people who want a home from building their own, from the permitting to the financing to the actual contracting. Except for the very wealthy.
A good chunk of people, perhaps most, want a house close to jobs and shops and schools and parks and museums and all those sorts of amenities.
Specialization into the very difficulty job of designing, permitting, and constructing housing makes sense. Not only is it a difficult job requiring tons of knowledge that a random person neither cares about nor needs to know about, specialized builders are far far far more efficient at building housing, and getting more housing completed for less money.
I didn't presuppose that housing should be built based on ROI, it just is that way, due to the realities of housing construction. I do think we need a public builder, modeled specifically after Finland's housing builder, as they have figured out some really great ways. Such a public builder has several economic advantages: provides a competitive floor for the private for-profit builders, and perhaps just as importantly a public builder can operate during the bottom of the economic cycle, employing construction workers through the downturn and providing much needed housing through the downturn thereby shortening the economic downturn.
Providing ROI to investors is a good thing if you want people to invest in something, because it means common self-interest will ensure it gets done.
And to zoom out, aren't there other things that are EVEN MORE important to invest in than building homes?
Where else is investor ROI going to come from?
I think this has been a phenomenon since VC became a thing, there's always been trends and fads - CEOs have had to chase them even when it doesn't make sense for the product.
I think this is the most wide-scale one I can personally recall (although I presume dotcom boom was similar), but I remember through the 2010s every database startup having to chase the same ball-game. Everyone was doing NoSQL, then everyone was doing analytics etc. Of course now all those companies have AI-native, vector-embedding, RAG, MPCs slapped all over their products.
The most recent $1B+ funding rounds:
Zipline - Nov 5 - $1.5B
HUMAIN - Nov 3 - $2.6B
Fal - Nov 3 - $1.3B
OpenAI - Oct 31 - $11B
Kalshi - Oct 29 - $1B
It's almost certainly about making sure that these startups use Nvidia stack.
If I invest in you and you use my stack and pay me for it. It's circular. I don't think it should be illegal to do this type of vendor financing/investment or what not as it has its legitimate uses.
But it is circular.
It's just to make sure the next OpenAI uses Nvidia stack.
This is not the case. This is just having influence.
I don't think this locks the startup into Nvidia stack. I don't think this is advertising either. It's just influence.
Circular is not the word I use to describe this business tactic.
Circular financing isn't inherently bad.
The question is whether it finances productive economic activity OR whether it manufactures the appearance of economic activity.
If I invest in you SO THAT you buy from me IN ORDER to materially and artificially boost my revenue.
I paid real money for the 4090. Real $2000
this however does scream "manufactured demand" - if the terms of your financing dictates that the money is used to purchase your own product.
Rather than sell a GPU at $500, instead you put the price up to $2000 but then invest in a startup on condition 80% of the investment is used to buy your hardware at inflated prices.
Arguably this is what's happening to 'datacenter' GPU's which are far more expensive than consumer ones for similar performance.
Even 5060 Ti 16GBs are at 1.8x MSRP.
What's an example of a datacenter GPU that has the same performance of a retail GPU but sold at a much steeper price?
nobody would scream circular financing because of this.
this however does scream "manufactured demand" - if the terms of your financing dictates that the money is used to purchase your own product.
Salesforce Ventures has invested $7b in more than 700 companies to boost its ecosystem.
I didn't see people calling this manufactured demand or circular financing.
For it to be circular financing, Nvidia would have to be investing in these startups who in turn buy significant $ volume in products and services from Nvidia.
Is this happening? For instance, what's a concrete example of a startup or even a group of startups where this is happening and what is the $ amount as a percentage of Nvidia annual sales?
Nobody is under any illusions that most if not nearly all this money is for anything other than buying GPU compute.
Problem is many people don't know what circular financing is. For instance, pick one of Nvidia's investments and explain why it is a circular financing arrangement.
These investments are likely drop in a bucket. A rounding error.
What they're truly looking for is the next OpenAI and to make sure that company runs on Nvidia.
AI boosters always deny reality.
And we found that Nvidia (or its venture arm) was in 79 of them. Sequoia was in 75 and a16z in 73. Nvidia on its own beat Lightspeed, General Catalyst and Accel.
Two other things that kinda surprised me was that counting rounds and counting dollars give different leaders. So the average round Fidelity joined was $7.7B, against $3.5B for Sequoia and 38% of these rounds had a corporate investor, up from 35% the year before.
The obvious question is how much of this is Nvidia funding demand for its own chips. I'd like to hear from people who've been on either side of one of these rounds.
Maybe VCs and Private Equity funds represents what is essentially oligarchs. They are oligarchs as institutions. Everyone knows this already. US has certain liking to captialism as long as it is represented trough institutions and not individuals. Controversial I know, but standard oil, billy boy gates and monopoly trials, musk and spacex being public companies. It is just America.
So, NVIDIA figured out an interesting play. NVIDIA is playing a risky game where US govt can anytime say "fuck you, I hate you now". But if they embroil themselves in enough foundational businesses across america saying fuck you to them is difficult. Startups are " think of the children" corporate America.
They have become part of the oligarch class, they have invested where politicians childrens are working or lets be clear founded startups. This is not curricular economy, it is nvidia buying insurance. If they were read blooded America it would have been leverage, but this is insurance. Saying fuck you to them is progressively getting harder.
Any way my legs are frozen that is enough conspiracy theories I can write from the stall.