| ▲ | aurareturn 6 hours ago |
| Before anyone screams "circular financing", it really isn't. It's almost certainly about making sure that these startups use Nvidia stack. |
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| ▲ | arnorhs 5 hours ago | parent | next [-] |
| nobody would scream circular financing because of this. it's only circular if those companies would then be investing (directly or indirectly) in nvidia. this however does scream "manufactured demand" - if the terms of your financing dictates that the money is used to purchase your own product. |
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| ▲ | londons_explore 5 hours ago | parent | next [-] | | It can also be a way to make the numbers look bigger for everyone... Rather than sell a GPU at $500, instead you put the price up to $2000 but then invest in a startup on condition 80% of the investment is used to buy your hardware at inflated prices. Arguably this is what's happening to 'datacenter' GPU's which are far more expensive than consumer ones for similar performance. | | |
| ▲ | andsoitis 3 hours ago | parent | next [-] | | > Arguably this is what's happening to 'datacenter' GPU's which are far more expensive than consumer ones for similar performance What's an example of a datacenter GPU that has the same performance of a retail GPU but sold at a much steeper price? | |
| ▲ | dannyw 4 hours ago | parent | prev [-] | | Are they still? At latest retail prices of 5090s, the economics don't seem to reflect that much of a discount; especially when you consider the half-rate BF16/FP16/etc accumulation (which has not been hacked/unlocked yet). Even 5060 Ti 16GBs are at 1.8x MSRP. |
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| ▲ | aurareturn 5 hours ago | parent | prev [-] | | nobody would scream circular financing because of this.
Majority would actually. See comments to my post. this however does scream "manufactured demand" - if the terms of your financing dictates that the money is used to purchase your own product.
This is nothing new. Intel Capital has invested $20b over its lifetime to boost Foundry and x86 ecosystem.Salesforce Ventures has invested $7b in more than 700 companies to boost its ecosystem. I didn't see people calling this manufactured demand or circular financing. |
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| ▲ | tru3_power 5 hours ago | parent | prev | next [-] |
| Sure but if Nvidia is funding these startups, isn’t it really still circular financing?? |
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| ▲ | vjvjvjvjghv 4 hours ago | parent | next [-] | | This reminds me a lot of the .COM startups in 2000 that were selling stuff to each other and once one failed, the whole chain would come down slowly. The scary part is the sheer amount of money that’s floating around now. In 2000 is was a few million here and there. Now it’s multiple billions. | |
| ▲ | andsoitis 4 hours ago | parent | prev | next [-] | | > Sure but if Nvidia is funding these startups, isn’t it really still circular financing?? For it to be circular financing, Nvidia would have to be investing in these startups who in turn buy significant $ volume in products and services from Nvidia. Is this happening? For instance, what's a concrete example of a startup or even a group of startups where this is happening and what is the $ amount as a percentage of Nvidia annual sales? | |
| ▲ | aurareturn 4 hours ago | parent | prev [-] | | See my post here: https://news.ycombinator.com/item?id=48874687 |
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| ▲ | origini 5 hours ago | parent | prev | next [-] |
| Especially as long as demand is as high as it is. I paid real money for the 4090. Real $2000 |
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| ▲ | TobiasJacob 5 hours ago | parent | prev | next [-] |
| Nvidia at this point is the new central bank of the tech world |
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| ▲ | dukeyukey 5 hours ago | parent | prev | next [-] |
| It's not circular financing, although Nvidia give startups investment money so they can give it back to Nvidia for hardware? |
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| ▲ | aurareturn 4 hours ago | parent | next [-] | | They're forecasting around $700b in revenue next year. These investments are likely drop in a bucket. A rounding error. What they're truly looking for is the next OpenAI and to make sure that company runs on Nvidia. | |
| ▲ | cmiles8 4 hours ago | parent | prev [-] | | If it looks like circular financing and smells like circular financing it’s circular financing. Nobody is under any illusions that most if not nearly all this money is for anything other than buying GPU compute. | | |
| ▲ | andsoitis 4 hours ago | parent [-] | | > If it looks like circular financing and smells like circular financing it’s circular financing. Problem is many people don't know what circular financing is. For instance, pick one of Nvidia's investments and explain why it is a circular financing arrangement. |
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| ▲ | wesammikhail 6 hours ago | parent | prev | next [-] |
| Isnt that... what circular financing often refers to? If I invest in you and you use my stack and pay me for it. It's circular. I don't think it should be illegal to do this type of vendor financing/investment or what not as it has its legitimate uses. But it is circular. |
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| ▲ | aurareturn 6 hours ago | parent | next [-] | | The money that Nvidia gives to these companies hardly make a dent in Nvidia's total revenue. It's just to make sure the next OpenAI uses Nvidia stack. | | |
| ▲ | serial_dev 5 hours ago | parent | next [-] | | None of this refutes the circular nature of it all, though. | | |
| ▲ | formerly_proven 5 hours ago | parent [-] | | Circular financing is when the revenue you get back is a fraction of what you put in, essentially. If you put in 1$ to get 10$ back in (future) revenue, that's not circular financing. |
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| ▲ | throwaway_new_1 5 hours ago | parent | prev | next [-] | | Yes so advertising and vendor locking. Which brings money back to them. Hence circular. | | |
| ▲ | aurareturn 5 hours ago | parent [-] | | When people accuse AI companies of circular financing, they meant it as a way to juice up their financial reports. This is not the case. This is just having influence. I don't think this locks the startup into Nvidia stack. I don't think this is advertising either. It's just influence. Circular is not the word I use to describe this business tactic. | | |
| ▲ | gchamonlive 5 hours ago | parent | next [-] | | Yes but how many such isolated cases are there? There is a real possibility that a lot of the AI bubble is fuelled not by dealing with itself but by pulverizing influence all over the market. | |
| ▲ | ericd 5 hours ago | parent | prev [-] | | It also makes everyone else’s success theirs. Personally I’m really happy to effectively be an LP in the Nvidia VC fund. |
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| ▲ | grey-area 4 hours ago | parent | prev [-] | | So you’re arguing it is circular but it’s only a little bit of money compared to Nvidia revenue so it doesn’t count? | | |
| ▲ | andsoitis 3 hours ago | parent | next [-] | | > So you’re arguing it is circular but it’s only a little bit of money compared to Nvidia revenue so it doesn’t count? Circular financing isn't inherently bad. The question is whether it finances productive economic activity OR whether it manufactures the appearance of economic activity. | |
| ▲ | aurareturn 4 hours ago | parent | prev [-] | | It seems so for those who lack critical thinking and think everything is a conspiracy theory to keep the AI bubble alive. |
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| ▲ | andsoitis 3 hours ago | parent | prev | next [-] | | > If I invest in you and you use my stack and pay me for it. It's circular. If I invest in you SO THAT you buy from me IN ORDER to materially and artificially boost my revenue. | |
| ▲ | charcircuit 6 hours ago | parent | prev | next [-] | | I don't think 1 loop is enough. You could remove the loop by just giving the GPUs directly as part of the investment. But investing in pure cash gives more flexibility especially in time where there may not even been spare GPUs able to be given away. | | |
| ▲ | aurareturn 5 hours ago | parent [-] | | Having equity in the startup means Nvidia can influence the founders to use Nvidia stack. |
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| ▲ | JohnHaugeland 5 hours ago | parent | prev [-] | | no, circular financing refers to it bouncing through several loops of that. the implication is that it’s system predators working the math, not the business. you should hear it in the same tones that bankers use the word leverage |
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| ▲ | swiftcoder 4 hours ago | parent | prev | next [-] |
| I mean, it's not quite as blatant as Amazon investing AWS credits, but a significant portion of it is going to be returned to Nvidia as hardware purchases, so it's not not-circular... |
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| ▲ | rvz 5 hours ago | parent | prev [-] |
| Then it is then. AI boosters always deny reality. |
