VC Firms Are Stocking Up on Nvidia A.I. Chips to Win Deals Amid GPU Shortage
Venture capital firms like Andreessen Horowitz are creating A.I. chips stashes to take advantage of soaring demand.
As the tech world races to get their hands on a dwindling supply of A.I. chips, venture capital firm Andreessen Horowitz has found a way to take advantage of the surging demand. The Melo Park, Calif.-based investment firm is stockpiling thousands of graphics processing units (GPUs) to rent to A.I. startups in exchange for equity.
Andreessen Horowitz, which has $42 billion of assets under management, has made bets on a broad range of A.I. companies that include OpenAI and Elon Musk’s xAI. Earlier this year, took its focus on the generative technology further as it began accumulating A.I. chips—including the sought-after Nvidia (NVDA) H100 GPUs—with plans to expand its stockpile to more than 20,000, the Information reported this week. The firm did not respond to requests for comment from Observer.
As demand for GPUs skyrockets, even Nvidia, the current market leader, has struggled to keep up. “The demand is really, really high and it outstrips our supply. We’re racing every single day,” Nvidia CEO Jensen Huang told investors in a recent call after reporting a 628 percent profit surge in the first quarter from a year prior.
Many of Nvidia’s top clients, which include Big Tech customers like Microsoft, Meta and Google, are looking to launch in-house A.I. chips to decrease dependency on the company.
Major A.I. investors are looking to providing GPU access
To aid smaller startups as they scramble to access A.I. chips, Andreessen Horowitz has reportedly spent hundreds of millions of dollars on either renting or buying GPUs to make available to its portfolio companies.
Luma A.I., a startup that raised $43 million in a Series B round led by Andreessen Horowitz in January, plans to use a cluster of some 3,000 GPUs to train new A.I. models and was one of the first companies to use its investor’s GPU supply. The startup was drawn to the firm as an investor largely because of its offer to provide computing resources, Luma A.I. CEO Amit Jain told The Information.
Andreessen Horowitz has also led investments for startups like Black Ore Technologies, a company aiming to combine A.I. and fintech; Air Space Intelligence, which uses A.I. to aid air travel; and Mistral, the French A.I. venture founded by former DeepMind and Meta researchers.
In April, the venture capital firm announced that it had raised $7.2 billion, with $1.25 billion earmarked for a fund focused on companies building A.I. infrastructure and another $1 billion targeting A.I. applications.
Andreessen Horowitz isn’t the first A.I. investor to embrace the gap between A.I. chip supply and demand. In 2023, investors Nat Friedman and Daniel Gross announced that they would make thousands of GPUs available to portfolio companies at fees below market price. The venture capital firm Conviction Partners has embraced a similar initiative to provide A.I. chip access to startups, while Index Ventures last year partnered with Oracle to offer Nvidia chips to emerging startups at no cost.