sega’s $5 Million Investment Rescued Nvidia From Collapse, CEO Reveals
SANTA CLARA, CA – A pivotal $5 million investment from Sega in the 1990s averted near-certain bankruptcy for Nvidia, according too recent revelations from the company’s CEO and co-founder, Jensen Huang. The unexpected lifeline allowed the graphics card pioneer to survive and ultimately become the $4 trillion tech giant it is today, fueled by the current artificial intelligence boom.
Huang detailed the story during an appearance on the Joe Rogan experience podcast, recounting a failed attempt to secure a contract building Sega’s Dreamcast console. Despite Nvidia’s inability to deliver the required technology – Sega ultimately partnered with VideoLogic – Huang successfully negotiated for the remaining $5 million owed for the work already completed.
He proposed Sega treat the payment as an investment, candidly admitting to Sega management that the funds ”is most likely to be lost” given Nvidia’s precarious position. Huang also stated that without the money,Nvidia would be forced to shut down. Sega executives acknowledged the high risk, conceding that even with the investment, Nvidia’s survival was unlikely.
Though, a senior Sega executive decided to proceed with the investment based on a personal connection with Huang. “Jensen was a young man [the CEO] liked. That’s it,” Huang explained, adding that he believed there was virtually no chance of repaying the investment.
the funds proved crucial, enabling Nvidia to focus on the burgeoning video game market. When Nvidia went public in 1999 with a $300 million valuation, Sega cashed out its investment. Huang estimates that had Sega retained its stake,the $5 million would now be worth approximately $1 trillion.
While Nvidia remains a meaningful player in the gaming industry with its GeForce GPUs and cloud-gaming platform GeForce Now, the company’s current revenue is increasingly driven by sales to artificial intelligence companies, as detailed in a recent Investopedia report.
