When somebody writes the biggest check in a round of venture funding, they usually want to shout it from the rooftops. Not so for Nvidia in its latest investment. The chip giant caused a stir last week when it objected to being called the lead investor in a $2 billion round of funding for Reflection, a one-year-old company developing open-source artificial intelligence software.
When somebody writes the biggest check in a round of venture funding, they usually want to shout it from the rooftops. Not so for Nvidia in its latest investment.
The chip giant caused a stir last week when it objected to being called the lead investor in a $2 billion round of funding for Reflection, a one-year-old company developing open-source artificial intelligence software.
While early press coverage and Reflection’s own law firm, Wilson Sonsini, identified Nvidia as the lead investor, Nvidia later issued a statement claiming it was not the lead investor but rather “one of several investors.”
It’s unusual for a firm to say something like that because investors typically covet the lead spot. The difference between being a lead investor and a participant in a funding round can make or break a venture fund’s performance and the careers of its partners.
Nvidia’s statement was also unusual because it had invested about $800 million of the $2 billion total in the funding round, making it the largest investor by a significant margin, said people with knowledge of the deal.
Asked on TITV about Nvidia’s investment, Reflection CEO Misha Laskin declined to name a lead investor in his company’s funding round, saying instead that the company had “multiple points of support” from its various investors.
So why does Nvidia object to being called the lead investor? As it turns out, Nvidia doesn’t view itself as the lead because it didn’t directly negotiate the final price and deal terms with Reflection, said people with knowledge of the deal.
Dallas, Texas–based firm Disruptive, which put in about $600 million, did the negotiating. The investment valued Reflection at $8 billion, including the new cash, a steep price for a startup with such a short operating history.
For most firms, not negotiating the price probably wouldn’t be reason enough to reject the lead investor spot. But Nvidia isn't like most venture capitalists. It’s the largest company in the world by market capitalization, with the most widely used AI chips. And it’s increasingly becoming a sort of central bank for the AI industry, providing billions of dollars in funding to OpenAI and others that will likely redirect a good chunk of that money toward Nvidia purchases.
That means Nvidia doesn’t want to be viewed as the party negotiating terms with the companies it backs, even if it’s making the biggest investment in a round of funding, said people familiar with its approach. Rather, it wants a venture firm to set the terms before it makes an investment.
Nvidia’s sensitivity regarding the Reflection deal is a sign of how it is trying to navigate its increasingly central role in the AI boom. Nvidia has made 60 startup investments so far this year, more than it did in all of 2024, according to PitchBook data.
In response to this column, an Nvidia spokesperson sent a statement it has issued in the past: “We do not require any of the companies we invest in to use Nvidia technology.”
That may be true, but it’s also true that a significant portion of the funding Reflection raised will likelygo back to Nvidia. Laskin said on TITV that Reflection is working closely with Nvidia on its next generation of chips. Expect others to pursue similar deals with Nvidia, regardless of whether it wants to be called the lead investor.
It’s becoming commonplace for venture capitalists to quickly bid up the valuations of promising AI startups. Look no further than Anysphere, the company behind the popular AI coding tool Cursor.
As we reported on Monday, Accel and Coatue Management are talking to Anysphere about making major investments in the startup at a $27 billion valuation, almost three times the valuation it received in a round of funding just four months ago. The talks came after Anysphere received investment offers at around a $30 billion valuation, as my colleague Natasha Mascarenhas earlier reported.
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