A16z Secures GPUs to Boost AI Startups

Andreessen Horowitz, a leading venture capital firm with $42 billion in assets under management, has strategically acquired thousands of GPUs, including many of Nvidia's H100 processors, to bolster AI startups, according to a report by The Information.

The firm, also known as A16z, has rented out these GPUs to numerous portfolio companies. It's currently unclear whether the GPUs were purchased outright or rented, but A16z's initiative, named “Oxygen,” is poised to grow to more than 20,000 GPUs, a source familiar with the project revealed.

The venture capital giant aims to leverage these GPUs, critical for AI development, to secure equity in emerging AI companies. The scarcity of such chips, often monopolized by Big Tech, makes this resource invaluable to small startups struggling to access them.

This isn't the first innovative use of GPUs in the AI sector. Last August, CoreWeave, a cloud service startup supported by Nvidia, raised $2.3 billion in debt, using Nvidia's H100 GPUs as collateral.

A16z's “Oxygen” program is designed to provide AI chips to its portfolio companies at below-market rates in exchange for equity stakes. Early participant Luma AI, a video generation platform, credited GPU access as a decisive factor in selecting A16z as their lead investor.

In the past two years, A16z has emerged as a major player in generative AI investments, backing companies like xAI, Mistral, and OpenAI. By offering scarce GPU resources, A16z is positioning itself as more than just a financier, potentially reshaping the AI venture capital landscape by giving its portfolio companies a competitive edge, especially smaller startups needing costly AI chips to compete.