Nvidia Might Not Have Existed If Not For This $5 Million Investment From Sega

Nvidia was founded in 1993 as a humble startup with the goal of developing 3D graphics for video games and other media. Today, everyone knows Nvidia as an absolute titan of the GPU industry. Even China's own graphics cards can't compete with Nvidia GPUs, which are powering the highest-end video game graphics and accelerating the use of generative AI. The company is so powerful that Nvidia lost $1 trillion in market value in 2026 and still took it in stride.

However, Nvidia almost ceased to exist in 1996 after it failed to fulfill an important contract for Sega, a very popular game console manufacturer at the time. Sega was in the process of developing the Dreamcast console, and Nvidia was chosen to build a graphics chip for the Dreamcast. Unfortunately, the startup poured all its money into an obsolete graphics rendering method, and the contract had to be abandoned. Without it, Nvidia did not have enough funds to continue operations.

The Dreamcast ultimately ended up with a graphics chip called "Holly," built by VideoLogic (now known as Imagination Technologies). But that's not the end of the story for Nvidia. The head of Sega of America, Shoichiro Irimajiri, still believed in Nvidia and its CEO, Jensen Huang. With Irimajiri's suggestion, Sega invested $5 million in Nvidia — that's approximately $10.6 million in today's money after inflation. The world's largest semiconductor company would not have survived to become so dominant if it weren't for a little help from Sega back then.

With the $5 million investment received from Sega, Nvidia had "six months to live" according to Huang (via CNBC). In that time, Nvidia developed the RIVA 128 chip, which was compatible with Microsoft's DirectX software interface. DirectX had become the standard for gaming platforms, and by building to accommodate it, Nvidia succeeded in developing a hit product that sold more than one million units.

Nvidia had become a force to be reckoned with. The company was credited with inventing the GPU in 1999, the same year it went public at $12 per share. Meanwhile, Sega had to stop making consoles after what happened to the Dreamcast; the console was a commercial failure following its international release in 1999. There was a silver lining for Sega amidst this financial turmoil, though: it was able to sell its stock in Nvidia for $15 million, tripling that initial investment.

Nvidia is a very different company now compared to the struggling startup that almost died in the mid-90s. At the time of writing, the all-time high Nvidia stock closing price was $235.47 — almost 20 times higher than its IPO. The company is also doing more than just innovating graphics technology now; Nvidia is running data centers at an unexpected temperature as part of its ongoing effort to maximize the value of AI investments.