Andreessen Horowitz shared how its Oxygen program helps AI startups 'breathe easier'

In July, several reports emerged that venture capital firm Andreessen Horowitz, an investor heavily focusing on AI startups, was stockpiling NVIDIA GPUs including H100 units, as it planned to build a cluster out of as many as 20,000 GPUs. The firm never replied to requests for comment, so the precise nature of the cluster remains unspecified, at least until recently. In one of the latest episodes of the AI + a16z podcast, General Partner Anjney Midha, who leads the Oxygen program with a16z Infra partner Guido Appenzeller, discussed the positive impact of the program on the firm's portfolio companies, as well as other topics related to the explosion of the GPU market.

The Oxygen program is designed to give early-stage startups 'options' they would not be able to access on their own. In particular, the Oxygen program focuses on enabling its portfolio companies to access short-term, flexible, and affordable computing resources, thus mitigating the market imbalance that was exacerbated by the explosion of generative AI and the purchasing power of bigger, established tech firms, which started being prioritized over smaller players, like startups, in terms of securing contracts with hyperscalers or being able to secure enough chips to run their operations locally.

The podcast episode still does not reveal many technical details about the program. However, it is easy to infer that it likely combines Andreessen Horowitz's cluster with long-term deals with its 'cloud partners'. Considering the firm's financial resources, it makes sense that it built a cluster that lets it eliminate the middlemen and charge startups for computing resources directly. It is equally reasonable to think that Andreessen Horowitz can leverage longer-term deals with cloud providers to rent clusters it can allocate among its companies.

In both cases, the benefits are the same: in addition to Andreessen Horowitz being able to provide its portfolio companies with what it calls 'an unfair advantage', access to flexible and affordable computing resources also means that startups no longer have to blindly commit capital that sometimes exceeds the amount they have on hand at that given time. By reducing the likelihood that startups need to enter deals under those conditions, the Oxygen program also relieves the pressure of having startups raise funds at inflated valuations so they can cover their computing bills.