Venture Capital
October 23, 2024
5 min

Andreessen Horowitz Launches Oxygen to Provide GPU Access to AI Startups

a16z has launched Oxygen, a private GPU cluster to help startups meet high-compute needs affordably and flexibly.

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Big idea:

  • Andreessen Horowitz (a16z) has launched “Oxygen,” a private GPU cluster program that provides Nvidia H100 GPUs to AI-focused startups in their portfolio. The program will support startups by giving them access to the computational power needed for AI model training and deployment without negotiating market rates.

Why it matters:

  • The Oxygen program addresses a critical supply crunch for GPUs, particularly Nvidia’s H100s, which has disproportionately affected AI startups. Startups often struggle to secure these resources as they face stiff competition from tech giants like Google, Meta, and Microsoft, which can offer large contracts. 
  • This program allows startups to access GPUs with fewer financial and logistical constraints, leveling the playing field and enabling AI innovation outside big tech.

Key details:

  • AI startups face a supply crunch, with major tech companies securing GPU resources through long-term contracts.
  • Oxygen provides computing power for model training on a short-term basis, allowing startups to avoid substantial cash outlays and lengthy commitments.
  • Startups give a16z an equity stake in exchange for affordable GPU access, making Oxygen an investment strategy and a competitive advantage for a16z.
  • While exact cluster size details remain undisclosed, reports indicate that Oxygen could house over 20,000 GPUs, potentially making it the largest GPU resource offered by a venture firm.
“This started from a 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 a16z partner Anjney Midha, highlighting the demand and need for Oxygen.

What's next:

  • Andreessen Horowitz plans to continue expanding the Oxygen program as the demand for AI compute resources grows, especially if the AI boom continues as projected.
  • By offering infrastructure support in addition to capital, a16z will strengthen its relationships with AI startups and might draw in new portfolio companies.

Proof point: 

  • The Oxygen program is part of a growing trend among investors to support portfolio companies with critical resources beyond traditional financial backing. Similar initiatives, such as Nat Friedman and Daniel Gross’s Andromeda Cluster and Y Combinator’s GPU partnerships, show a shift toward resource-based support to strengthen the competitive position of startups in the AI space.

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