AI chips are sealing the deal flow for VCs

Venture capital firms are leveraging access to hardware and their relationships with major cloud providers to help AI startups gain access to GPUs needed for developing AI models.

What's going on here?

Venture firms are using their connections at Amazon, Microsoft, Google, and others to get AI startups preferential access to limited GPU chips.

What does this mean?

Firms like Greylock, Madrona, and Bessemer have been instrumental in helping their portfolio companies like Adept, Inflection, and Laredo Labs land deals for thousands of Nvidia GPUs from cloud providers. This allows startups developing AI models to bypass waits and secure the specialized hardware they need.

Why should I care?

The VC relationships are providing a competitive advantage to their portfolio companies in the race to build cutting-edge AI. Given the current supply constraints on chips, startups not backed by top-tier VC firms can face debilitating delays in getting access. But with VC assistance, they can get prioritized and accelerate development.

It shows how influential VCs can shortcut logjams using their connections. For any startup needing significant compute power, allying with a top VC may determine whether they sink or swim right now.

Related read: Lamini ditches Nvidia in favour of AMD chips.