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18 April 2024·4 min read

Troy Estes

Developer Relations at NVIDIA

Investing beyond the portfolio: how VCs can build a thriving tech ecosystem

The role that Venture Capital (VC) firms play in helping to develop thriving ecosystems has changed significantly as the technology industry has evolved. Instead of focusing primarily on their ability to identify and invest in high-potential startups, many VCs are creating or investing in ecosystem initiatives to help insulate their portfolio companies and create dynamic and competitive industries in new markets.

Investing in and supporting wider industry initiatives represents a holistic approach to fostering a thriving tech ecosystem. VC involvement in these initiatives carries significant weight and can shape the trajectory of innovation for a technology sector and the regional competitiveness of an ecosystem.

Examples of VC-led ecosystem initiatives are easy to find. From accelerators and private events to strategic guidance and networking, it’s clear that VCs and startups alike understand the value of these activities. However, many of the most impactful VC-led initiatives are exclusive to existing portfolio companies, meaning the broader ecosystem of startups is unable to also benefit from these opportunities.

In a mature market, this strategy might make sense to help provide a competitive edge to portfolio companies. But in markets surrounding rising or “emerging” technology, such as artificial intelligence, there is often a greater advantage in creating events and initiatives open to the broader ecosystem. This approach can lead to faster innovation and a more resilient market.

The power of shared knowledge

Major technology advancements do not happen in a vacuum. They are the result of building on top of previous research and breakthroughs that combine new technology with new ways of thinking. The old metaphor “standing on the shoulders of giants” helps to articulate this phenomenon. The metaphor also helps to describe what will happen next in the AI industry over the next few years. With the amount of resources and expertise getting poured into the industry, the next few years will result in an explosion of AI-accelerated applications and use cases that will affect every industry. All of these new solutions will be built “on the shoulders of giants”.

For VCs investing in startups developing AI solutions, there are huge benefits in not only exposing portfolio companies to as much knowledge as possible, but also to encouraging expertise to flow back into the ecosystem. This approach can make new technology and information available for portfolio companies, enabling them to make faster and more skillful iterations on their product. It can also help to build partner solutions that are complementary or necessary for VCs’ portfolios, to nurture new startups, and to develop a deep talent pool in the industry that will fuel innovation.

Examples of knowledge sharing initiatives include activities with universities and other academic institutions, mentorship sessions at ecosystem accelerators, speaking slots at events and meetups, and partnerships with other ecosystem players, including other VCs. 

By embracing a culture of knowledge sharing, VCs play a pivotal role in accelerating the development and adoption of transformative AI technologies that benefit the entire market.

The power of partnerships

While expertise is a critical component of success, access to resources remains the catalyst of innovation. Therefore, activities that make those resources available to an ecosystem can be extremely strategic in nurturing growth. Of course, VCs are well-positioned to provide financial resources to their portfolio companies. However, there are other types of required resources that can be difficult to acquire or access, such as data sets, pre-trained models, compute resources, and technical guidance. These resources can be obtained through partners.

By partnering with large organizations, VCs can help provide the ecosystem access to the types of resources that are not normally easily available. Additionally, there are further benefits for VCs to foster collaboration with enterprises including deal flow through their startup communities, strategic partnerships for portfolio companies, and discounts on hardware and software.

There are many enterprise programs specifically designed to engage VCs in the AI ecosystem, with benefits tailored to both helping portfolio companies, and also the broader ecosystem. One program is the NVIDIA VC Alliance.

The NVIDIA VC Alliance is an initiative between NVIDIA and investors around the world who invest in startups building cutting-edge technology with AI, data science, and high-performance computing. By joining the Alliance, investors gain access to a wide range of member-only benefits including bespoke portfolio support, industry insights, collaboration opportunities with NVIDIA Investment Teams, and access to members of NVIDIA’s global startup program.

By leveraging the NVIDIA VC Alliance and similar enterprise programs, VCs support their portfolio companies and empower the broader ecosystem.

Learn more about the NVIDIA VC Alliance.


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