The Rise of NVIDIA The Most Legendary Angel Investment in History

Author, Liu Bo, Investment Sector PEdaily
This marks a significant milestone in the history of global venture capital.
Not long ago, Huang Renxun mentioned in a speech at his alma mater Stanford University the first financing in his life — in 1993, two angel investors jointly invested $2 million, valuing the company at $6 million. It was this investment that saved NVIDIA, which was on the verge of collapse just after its establishment.
Since then, the NVIDIA Empire has emerged, dominating the tech industry.
Looking back, the angel round from that year has now created a myth with a market value of $2.8 trillion, undoubtedly the best interpretation of how venture capital has helped tech giants rise. Historical experience shows that the level of venture capital activity directly affects the prosperity of technology innovation companies, which is more worth pondering at this moment.
No Business Plan
$2 Million in Angel Funding
This investment story dates back to 1993.
At that time, Huang Renxun was working as an engineer at a chip company when two friends, Chris and Curtis, approached him expressing their desire to leave their jobs and start a business, hoping Huang Renxun would join them. It was just before the PC revolution, with Windows 95 yet to be released, and the Pentium processor still on the horizon. It was evident that microprocessors would be crucial, and NVIDIA was born.
There was an interesting anecdote when Huang Renxun told his mother about his plan to start a 3D graphics chip company for gaming. She directly asked, “Why don’t you find a job at an electronics factory instead?”
In short, Huang Renxun’s entrepreneurial journey had a rocky start, as he didn’t even know how to write a business plan. To address this, he went to a bookstore to find a book titled “How to Write a Business Plan,” which had a hefty 450 pages. After flipping through a few pages, he gave up, saying, “By the time I finish reading it, the company would probably have gone bankrupt, and the money would have run out.”
How difficult was it for NVIDIA to raise funds at that time?
Sid Siddeek, who was in charge of NVIDIA’s venture capital department, still vividly remembers: armed with presentation materials, he rushed to numerous investor conferences to help NVIDIA’s CEO and management team promote their story. His office was nothing more than a tiny mobile room.
Recalling the past in his speech, Huang Renxun mentioned that at that time, he had only about six months’ worth of living expenses in the bank, and the whole family had to rely on this meager savings. So, he decided not to write a business plan and instead went straight to the former CEO of his company, Wilfred Corrigan.
After listening to Huang Renxun’s pitch, Wilfred Corrigan bluntly admitted that he had no idea what he was talking about, calling it one of the worst startup pitches he had ever heard. Nevertheless, Wilfred Corrigan picked up the phone and called Sequoia Capital founder Don Valentine, saying, “I want to send a young man to you, hoping you can invest in him. He was one of our best employees.”
However, after Huang Renxun completed his presentation, Don Valentine said, “Startups should not invest in other startups or collaborate with them.” His view was that for NVIDIA to succeed, another startup also needed to succeed, which was Electronic Arts, a video game development company. The CTO of that company was only 14 years old at the time, and his mom had to drive him to work.
Thus, Don Valentine and Satish Dharmaraj Capital each invested $1 million, allowing NVIDIA to secure $2 million in angel funding with a post-investment valuation of $6 million. It is worth noting that before this, Don Valentine had invested only a few hundred thousand dollars in Apple Inc.
This investment, which remains indelible to this day, is still vivid in Huang Renxun’s memory, with Don Valentine saying at the meeting, “If you lose my money, I’ll kill you.” Fortunately, Huang Renxun and NVIDIA did not disappoint his expectations.
A Mirror
Venturesome Capital
To this day, this angel investment has been enshrined in history.
In 1999, NVIDIA went public on the Nasdaq with a market capitalization of $230 million. By this calculation, the valuation of NVIDIA’s angel round had increased by 38 times, even after partially exiting post-IPO, it was still a good choice. But with Don Valentine’s investment philosophy, he is bound to persist and achieve even higher returns.
The subsequent story does not need to be reiterated. NVIDIA has risen to become a chip giant and with the emergence of OpenAI, has become a deserving ruler in AI chips. Accompanying this, NVIDIA’s rocketing stock price – over the past five years, NVIDIA’s stock price has grown 28 times, with its latest market value reaching an astonishing $2.8 trillion.
Perhaps only those who have experienced it can truly empathize. Huang Renxun has emphasized the importance of financing many times before, believing that a startup is a company on the brink of collapse. “When I founded NVIDIA, after each round of financing, I immediately started raising funds for the next round, then the third round. Survival is crucial, cash is king. As a CEO, you either make money, save money, or raise money.”
At the same time, NVIDIA has quietly built a vast investment portfolio. According to S&P Global data, NVIDIA has become the fourth-largest venture capital firm after Microsoft, SoftBank, and Google in 2023, with investments covering areas such as healthcare and biotechnology, AI infrastructure, generative AI and RPA technologies, autonomous driving, robots, and 3D printing.
As Huang Renxun has emphasized on many occasions, the rapid development of the tech industry requires early investment in the distant future, which is the path NVIDIA must take.
In the eyes of Mi Lei, Founding Partner of Zhongke Chuangxing, NVIDIA’s success once again underscores the long-term nature of “hard technology” and the importance of “knowledge value.” To maintain a leading position, continuous focus on technological innovation and ongoing research and development investment are essential.
As an investor, Mi Lei has deep insights. He believes that for venture capital firms, overly pursuing short-term financial returns will prevent them from investing in great companies. “The essence of venture capital is to support disruptive innovative technologies to create greater value, drive technological progress and industry change, and ultimately reap ‘knowledge value,’ ‘social value,’ and ‘economic value.'”
To a certain extent, this is also the best mirror for domestic venture capital.
In the 1990s, venture capital began to sprout in China and has now been around for thirty years. However, at present, venture capital, as a foreign concept, is becoming more localized than ever before. Some VCs are no longer focused on capturing risks but have turned into rigid profit guarantees, seeking short cycles, risk-free investments, and guarantees.
At the moment, buybacks, bets, and dividends are common in the primary market in China. For example, buyback agreements between founders and investment institutions are no longer surprising. However, since last year, things have started to change — buybacks have become a hard condition for investment decisions. If the controlling shareholder is unwilling to sign a buyback agreement, the investment will not proceed.
“The charm of venture capital lies in finding innovative ideas that are uncertain but potentially disruptive.” A venture capital partner who preferred to remain anonymous lamented that it is essential to be cautious about some practices that may prevent us from discovering other great innovations.
Patient Capital
The Rise of Chinese Technology
What role should venture capital play in the rise of technology? This is undoubtedly worth reflecting on for every venture capitalist.
It is well known that technological innovation is not achieved overnight. To achieve original and disruptive results, one must go through the arduous process of laying the technical foundation, breakthroughs, market application, and face a long return cycle with many uncertainties. In the tide of the market, many tech startups struggle due to large initial investments, obstacles in converting results, and may not show good financial performance for a long time, or even “collapse before dawn.” The more challenging the journey, the greater the need for patient capital.
What is patient capital? As the name suggests, it guides capital to be “friends with time,” unaffected by short-term market fluctuations, accompanying hard tech, scientists, and entrepreneurs in the long run. However, faced with the current reality, some investment institutions seem to no longer value imagination and long-termism.
A prominent local venture capital figure in Shenzhen bluntly stated that the general fund life of domestic venture capital funds is 3+2 years, with a maximum of 7 years. However, it generally takes 6-10 years for a standard company to meet the listing requirements, making it challenging for some RMB funds to hold excellent companies for the long term.
“Part of the investors are accustomed to making quick money, adapting to a fast-paced investment rhythm, convincing them to invest for over ten years is indeed difficult. Also, Chinese investors do not like to entrust their funds to professional organizations; they often prefer to invest themselves,” said Yang Bin, President of Shanghai Science and Technology Innovation Fund.
Chang Junsheng, Executive Director, Chairman of the Investment Committee, and General Manager of Jinshi Investment, pointed out the underlying differences — foreign major investors seek long-term asset allocation and even hope to extend the investment period. “But in China, both individuals and institutions have relatively short assessment periods. If I cannot exit within my term, then that project will definitely not be pursued. So, fundamentally solving this problem can only be hoped for with more long-term funds entering the equity investment market.”
He also emphasized the need to provide LPs with reasonable expectations guidance. “Looking at the overall progress of China’s economic development, our fund returns, including the expected returns of our LPs, should appropriately be lowered or the term extended. Holding onto the concept of long-term investment, growing together with time.”
In response, Mi Lei offered several suggestions, stating that strengthening patient capital first requires freeing the mind, updating perspectives, realizing that only a long cycle can bring higher returns. From the government to enterprises to all LPs, everyone should recognize the long-term value of patient capital and its potential for significant future returns, supporting VC/PE to make longer-term investments, leading to funds with a period of over ten years. Policies should also offer some benefits to patient capital. For instance, tax incentives should be provided to patient capital that supports technological innovation.
Entrepreneurship is challenging, and the innovative journey from “0 to 1” is most exciting. However, before this moment arrives, entrepreneurs often have to endure a long and lonely road, requiring venture capital to accompany them along the way. Just as Don Valentine said in “The History of Venture Capital”:
“Venture capital is not a divine view of the world but a journey of entrepreneurship, a journey taken with entrepreneurs.”