Microsoft and NVIDIA lead in AI startup investment, but others follow

Last week, chip giants Nvidia, Salesforce Ventures 1 and Cisco reportedly invested $450 million in Toronto-based AI startup Cohere, the same day Cisco and its investment arm Cisco Investments made headlines by launching a $1 billion AI investment fund.

These notable maneuvers by some of the tech industry's biggest names are just the latest examples of these giants' desire to be leaders in the field of generative AI at best, and not fall behind at worst.

Of the handful of tech giants that have poured significant funds into the space so far this year, Microsoft and NVIDIA (and their respective venture arms) have been leaders when it comes to investing in VC-backed AI startups, according to Crunchbase data, but others like Google and Databricks are not far behind and are likely reaping the benefits.

Let's look at where the big tech companies are putting their money.

NVIDIA

Of course, no company has been more successful in the AI revolution than Nvidia (maybe too successful for governments to say anything, but more on that later), with the company's revenue beating expectations and its market cap soaring to nearly $3 billion.

The company has used some of that inflow to invest in 10 rounds in VC-backed AI companies this year alone, according to Crunchbase data. Those deals, including seven rounds worth more than $100 million, include:

The company participated in Scale AI's $1 billion funding round led by Accel, giving the data labeling and recognition startup a staggering valuation of $13.8 billion. The new funding also includes investments from Meta and Amazon.
Sunnyvale, California-based Figure has reportedly raised a huge $675 million funding round at a pre-money valuation of about $2 billion. The company is developing AI-enhanced robots that it hopes can help ease labor shortages by performing dangerous tasks.
Paris-based Mistral AI has raised $6 billion in a $640 million funding round in a combination of debt and equity, the Financial Times reported.

The company's venture arm, NVentures, also helped broker the deal, having been involved in four deals this year, the largest of which was leading an $85 million Series C round for AI-powered agricultural robotics company Carbon Robotics.

Last year, Nvidia closed 22 funding deals in AI itself, plus 10 more with NVentures.

Microsoft

Of course, Microsoft's biggest shot in the AI arms race came early last year, when it agreed to a multi-billion dollar investment, reportedly reaching $10 billion, over several years in OpenAI, the startup developing artificial intelligence tools ChatGPT and DALL-E.

Microsoft has been making big waves in AI investments ever since.

The biggest was a huge strategic investment of $1.5 billion in United Arab Emirates-based artificial intelligence company G42, acquiring a minority stake in the startup.

But it's not the only deal the Windows developer has made this year: the company has done four deals, according to Crunchbase data, while its always-very-active venture arm, M12, has done seven.

Of the four deals it participated in, three were large, at least $675 million, including a $1.05 billion round into London-based self-driving car startup Wayve and the aforementioned Figure round.

On top of all this, Microsoft in March signed a deal with Inflection AI to pay the company $650 million to license its AI software and hire most of its staff. The deal isn't a formal acquisition, so it appears to have been worked out in a way that avoids regulatory hurdles, but it does demonstrate the tech giant's insatiable appetite for all things AI.

Meanwhile, the largest deal involving M12 was an $80 million investment round in Palo Alto, California-based Foundry, which is developing a public cloud purpose-built for ML workloads.

Microsoft and M12 made a total of 21 investments in AI startups last year.

Google

Following these AI giants, Google and its venture arm GV have made seven deals involving VC-backed startups.

But unlike Microsoft and Nvidia, Google's investments so far this year have been small: None of the rounds it has invested have exceeded $57 million, and in fact, Google itself has only invested in seed rounds in AI startups.

GV has done perhaps its most interesting deal: co-leading a $27.5 million Series A round for WitnessAI, a startup focused on guardrails to make AI safer and easier to use.

We have others, too

Other major tech companies and their investment arms, including Qualcomm and Salesforce, have also participated in several funding deals for AI startups this year, but not at the same pace as the group mentioned above.

But companies that are still privately held are making headlines in the investment world by making no secret of their AI efforts: Databricks just last month announced the new Databricks AI Fund as part of Databricks Ventures.

Prior to announcing the fund, the venture arm had already been involved in eight deals this year, some of which were sizeable.

Databricks Ventures participated in AI-enhanced work assistant and enterprise search startup Glean's $200 million Series D funding, valuing the company at $2.2 billion, and was also involved in AI search startup Perplexity AI's $73.6 million Series B funding, led by IVP, which also included participation from NVIDIA and Jeff Bezos.

Possible warning

Corporate investment in the AI space shows no signs of slowing, but news last week that the Federal Trade Commission and Department of Justice are both opening investigations into Microsoft, OpenAI, and Nvidia may help pour cold water on AI investment spirits.

So far there is no evidence that the DOJ will investigate Nvidia's investment transactions, but the FTC will reportedly investigate Microsoft's relationship with OpenAI, as well as Microsoft's actions in the context of Inflection AI.

The dual investigations could lead the two companies to pause investing in startups until it becomes clearer how the regulators' actions will affect their own businesses, even if that wasn't the focus of the investigations.

It may also prompt other large companies to rethink some of their deals, lest they become the next target of increased scrutiny.

If that happens, venture funding could slow again: AI companies received $12.5 billion in investments in more than 250 companies in May, accounting for 40% of all venture funding that month, according to Crunchbase data.

With AI currently fueling VC investment, the last thing many in the venture and AI industries want is for Big Tech to disappear.