This week, I'm working with an Nvidia-competitor that raised over $40m.

My key takeaways of this highly demanded sector.

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Sometimes you feel that your product has a market need or it solves a specific problem in society, like how Uber solved the problem of ride-hailing and how taxis were inefficient at that time. That’s a type of problem.

Now, what Nvidia is doing these days is solving a desperate problem on a much higher level. Companies are practically begging for Nvidia chips, and they know that there was a semiconductor catastrophe a few years ago. This creates not just market demand but market desperation. When you’re operating in this field, your product is in constant demand.

Hence, the focus is not really on whether your product solves a specific problem. It’s about how much you can produce in terms of products and how much you can fulfill in terms of orders. It turns into a sales game while also maintaining the quality of the product. A small mistake could actually put your reputation at stake, which would lead to them going to the other competitor.

That’s exactly the school of thought that Nvidia is working on right now. That’s why it climbed to become one of the top three companies in the world in just a year.

I am working with a startup in Europe this week that has raised over $40 million and is operating in more or less the same industry. When we’re working on creating an investment document or a business document in this sense, there are a lot of key takeaways to be mentioned. It’s totally different than a company at an ideation stage or a company that is raising a seed investment. It has a totally different story and a totally different approach.

Let me tell you my takeaways from working with such a startup in such an industry.

Takeaway 1: Focus

The element of convincing in an investor presentation, for example, does not have to be focused on.

In most business presentations or investor presentations, you’re trying to convince the reader with your products. You’re trying to convince them with how good it is. But when it comes to working in such an industry and working with investors who really want to invest in this industry at this moment due to the fear of missing out, you don’t really have to work on a lot of convincing in this sense.

We’re working in this industry, we have a product that is good, and that’s the extent of it.

You really don’t have to go as deep as to show that you are much better than all the competitors and that you are the best investment they could possibly make at this stage. You’re not competing with Nvidia, and any investor who’s reading your document is not really gonna believe that. They won’t believe you’re gonna take on a giant like Nvidia. But they do believe you’re gonna make money in an industry that is extremely in demand and that will keep on being in demand in the next years as much as AI is growing.

When you put this all in perspective, you’re gonna notice that you don’t really need to speak much of the problem you’re trying to solve or the solution and the uniqueness of the solution you’re offering. Don’t get me wrong; you’re gonna speak about those things, but you’re gonna be brief about them. There is a certain level of understanding between you and the reader.

Yes, we are operating in this industry, and yes, we have a product that is of value. You want to invest, and we know that.

Takeaway 2: Only Updated Market Research

There are some industries like the cryptocurrency industry that if you don’t research the market every month or so, then the market research could actually be useless. Imagine researching the crypto world and pitching for a product that works as a cryptocurrency exchange just a month before the crypto world crashed due to FTX and what happened in the crypto world. That would be okay. But if you had pitched the same exact pitch right afterward, you would have had a different level of attention and a different level of valuation at that stage.

That’s why research is extremely vital in these industries and it has to be updated frequently. When it comes to this “Nvidia world”, it is more or less the same thing. The world is highly reliant on AI chips. Keep on convincing every person reading your documents with this statement. If AI crashes or AI demand decreases, then the demand for Nvidia will decrease, their sales will decrease, and everything will decrease in the sense of making the industry shaken up a bit.

Monitoring Nvidia’s Growth

One of the main factors that market researchers look into is Nvidia’s growth and how much money they are selling quarter over quarter. They keep looking at Nvidia’s quarterly reports and see whether Nvidia actually reached the estimates of Wall Street. Did they actually sell that many AI chips? Are they really still working in the market? It’s the perfect indication of how the market is growing. It isn’t the only one, of course, but it’s a good one.

Takeaway 3: It is rocket science.

When you’re in the entrepreneurial world, you hear a lot of ideas from different entrepreneurs who want to be. The truth is there are a lot of people who created products that are not that technically sophisticated. Like Airbnb, an app that just connects homeowners with people who want to travel. The concept itself is brilliant, but the applications in terms of the sophistication of technology are absolutely non-existent. It was very easy to create an app that would just prove as an MVP. Of course, nowadays Airbnb is much bigger, it’s much more sophisticated, but in the core idea of the app, it’s easily imitated.

The Complexity of AI Chips

The world of chips is absolutely different. You could create a company that would help in the logistics, delivery, or selling of such chips. That’s one thing. But if you’re really looking to break through into this market, you’re gonna need to start hiring people who know what they’re doing.

It is probable that the people who would compete with Nvidia are people with a high technical sophistication. By a high level of technical sophistication, I’m not talking about people who just had a coding course or a couple of coding courses or who might have worked at Apple or Microsoft. I’m talking about people who dedicated their studying life to a specific part of physics or software engineering in this sense in order to achieve something that is just slightly better in terms of variables.

These are the people that construct a company that could actually compete with a giant like Nvidia, AMD, or Intel. They always say that creating a rocket company like SpaceX or Blue Origin is a game of the rich. Because it’s true, in order for you to create a rocket, even if you have a lot of technical knowledge, you need quite a big amount of money in order to fund an initial rocket, which probably will not work out. So that’s why it’s a game of the extremely highly rich.

The AI Chip Market

When it comes to working in the AI chip market or Nvidia’s market in general, instead of money, your best asset is your technical knowledge in the matter. How much of a breakthrough can you achieve by going into the lab and developing something that works just a little bit faster or more efficiently? Then the sales game begins.