How Israel Became NVIDIA’s "Second Home" - #0034, Aya Peterburg

About this episode

When S Capital first backed Run:ai in 2018, there was no AI boom to ride. Large language models weren’t part of the mainstream vocabulary and ChatGPT was still far into the future. GPUs were powerful but inefficient, and the problem Run:ai set out to solve, orchestrating and optimizing GPU usage at scale, was largely invisible.

“The word of AI was not as it is considered today,” investor Aya Peterburg recalled. “No one knew to say even ‘LLM’ or what that means.”

Seen through that lens, NVIDIA’s ultimate 2024 acquisition of Run:ai was not a bet on hype, but the continuation of a strategy that began four years earlier with its purchase of Mellanox Technologies. It first embedded NVIDIA into Israel’s engineering ecosystem, anchoring its data-center, networking, and high-performance computing capabilities in the country.

Run:ai and others would then extend that footprint into the software layer that determines how AI actually runs at scale.

Together, the two acquisitions tell a coherent story: Israel is not just a distant satellite office for NVIDIA, but where some of its most critical infrastructure problems are solved.

Run:ai identified a structural inefficiency at the heart of AI computing. Companies were paying for expensive GPUs while extracting only a fraction of their potential. As Peterburg explained, customers were “pay[ing] more money to NVIDIA… but they got back in the day only 15% of what they paid for” because GPUs running large workloads couldn’t communicate efficiently.

The challenge was timing. “You couldn’t sell to startups as design partners,” Peterburg said. “You have to sell to those large organizations.” With no direct competitors and no clear market category, Run:ai had to wait for the AI world to grow into its necessity.

That patience required a specific kind of investor. “We see ourselves as helping them to understand what they have in their hand,” Peterburg said. “It’s the founders who will be able to tell the story.” For her, that partnership is built outside formalities. “I never learned something new in board meetings,” she added. “We sometimes do a lot of walks on the beach… it makes you think of problems differently.”

Like many companies in Israel, they faced a challenge during the war. Run:ai employees were called into reserve duty, some into active combat. Yet NVIDIA proceeded with the acquisition: a sign that its commitment to Israel is not contingent on stability, but on capability.

That commitment is bearing fruit with a new 10,000-employee campus in Kiryat Tivon and plenty more expansion in the future.

From Mellanox to Run:ai, NVIDIA has effectively stacked Israel into its core architecture: networking, hardware efficiency, and AI workload orchestration. For Peterburg, the lesson is clear. “As an investor, I believe that our role is being measured in the bad days,” she said. “Helping the founders find their way to a safe zone.”

Run:ai’s story shows what happens when that philosophy aligns with corporate strategy. Israel is no longer just a place where companies are built. As NVIDIA CEO Jensen Huang puts it, it is a “second home” where the future of global AI infrastructure is taking shape.

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