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Andreessen Horowitz has a massive portfolio of Nvidia H100 GPUs to help its portfolio of AI startups meet their computing needs, the venture capital firm first confirmed on Wednesday. The software, called Oxygen, allows its portfolio companies to train or run their own AI models without negotiating market prices.
The A16Z Oxygen Kit gives startups some breathing room, so to speak, to compete against big tech companies — like Google, Meta, and Microsoft — in building large AI models. Over the past several years, these companies have engaged in a bidding war for GPUs, especially the AI industry-standard H100s, often winning deals by promising larger and longer contracts. This leaves a lot of AI startups out in the cold, because they may not be able to get the large contracts needed to secure GPUs, while the OpenAIs and Anthropics of the world can.
“This started from the realization that a number of the AI founders we serve every day had a common problem: we were in the middle of a supply crunch, where Nvidia H100 capacity was in short supply,” said Anjney Midha, A16Z partner, who helped create the Oxygen software, in Podcast transcript shared with TechCrunch. “As startups, they were deprioritized by large clouds in favor of larger customers, which was very difficult for them.”
Infrastructure is also a good way for A16Z to attract new startups. Companies building AI models often need unfettered access to huge compute clusters for short training periods, but then don’t need it once the models are trained. Inferring AI models typically requires less computation than training, unless of course the use of the AI model increases. The A16Z’s Oxygen suite provides flexibility to startups, giving access to GPUs when they need them, without a long-term commitment to a cloud provider or a huge cash outlay. Instead, they give A16Z a stake in their business, in exchange for (among other things) lower GPU rental rates.
But A16Z aren’t the only investors promising startup founders GPUs, as well as financial capital and mentoring, for stakes in their companies. Investment partners Nat Friedman and Daniel Gross present their startups Access to the GPU 4000 cluster It’s called the Andromeda Group, according to Forbes. Y Combinator also offers startups a range of GPUs for training through partnerships with several cloud providers, most recently Google Cloud.
A spokesperson for Andreessen Horowitz declined to comment on the size of the Oxygen suite, however, the A16Z may have the largest GPU war chest of any enterprise company. Information I reported in July that Oxygen could have more than 20,000 GPUs.
At one point in the podcast, Midha says that Oxygen Group could ease the pressure on AI startups to raise money at inflated valuations in order to pay their computing bills. This is another way that oxygen benefits from A16Z. Instead of investing more in a startup so it can buy GPUs from Microsoft for example, the A16Z can offer the same GPUs and invest at a lower price.
A16Z views Oxygen as a core value proposition for its startups going forward, as long as AI continues to flourish as expected. This is likely why the startup has made the huge investment required to secure these chips.
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