It can also be a way to make the numbers look bigger for everyone...

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.

  nobody would scream circular financing because of this.

Majority would actually. See comments to my post.

  this however does scream "manufactured demand" - if the terms of your financing dictates that the money is used to purchase your own product.

This is nothing new. Intel Capital has invested $20b over its lifetime to boost Foundry and x86 ecosystem.

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.

This reminds me a lot of the .COM startups in 2000 that were selling stuff to each other and once one failed, the whole chain would come down slowly. The scary part is the sheer amount of money that’s floating around now. In 2000 is was a few million here and there. Now it’s multiple billions.

> Sure but if Nvidia is funding these startups, isn’t it really still 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?

See my post here: https://news.ycombinator.com/item?id=48874687

They're forecasting around $700b in revenue next year.

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.

If it looks like circular financing and smells like circular financing it’s circular financing.

Nobody is under any illusions that most if not nearly all this money is for anything other than buying GPU compute.

The money that Nvidia gives to these companies hardly make a dent in Nvidia's total revenue.

It's just to make sure the next OpenAI uses Nvidia stack.

> If I invest in you and you use my stack and pay me for it. It's circular.

If I invest in you SO THAT you buy from me IN ORDER to materially and artificially boost my revenue.

I don't think 1 loop is enough. You could remove the loop by just giving the GPUs directly as part of the investment. But investing in pure cash gives more flexibility especially in time where there may not even been spare GPUs able to be given away.

no, circular financing refers to it bouncing through several loops of that. the implication is that it’s system predators working the math, not the business. you should hear it in the same tones that bankers use the word leverage