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Persistent and subtle, the momentum behind deep tech is building. Founders and VCs are quietly and diligently working on the worldâs biggest problems, hype cycles be damned.
The enthusiasm is starting to expand into every corner of startups and venture capital. Commenting on the difference between companies working in bits (software) and those dealing in atoms (the physical world), this week Packy McCormick said, âAtoms are getting sexy again. Thatâs something we support and can be optimistic about.â
Why is there so much deep tech excitement lately? A few things are happening at once:
(1) Founders and investors are seeing the appeal; Elon Musk, Sam Altman, and others are showing us in real time that venture-backed deep tech startups can work.
(2) Competition between the East and the West is reaching new levels of intensity. The U.S. is in yet another battle of ideas, with the principles of democracy pitted against Chinese and Russian authoritarianism. Private sector technologists want to help, and U.S. government agencies want to leverage the might of American innovation.
Many see âreshoringâ as the first step. Ryan Li and Jai Malik at Countdown Capital wrote about this a few months ago:
Many people are rightly coming to the conclusion that America must decouple its supply chains from China. As competition and tensions heighten between our nation and China, it looks increasingly alarming that 78% of our rare earth imports, 62% of our electronics imports, and up to 50% of our lithium-ion battery imports come from our greatest rival. It is thus no surprise that reshoring supply chains has gained major momentum over the past twelve months. Since April 2022, manufacturing employment growth in America has been at its highest in nearly 40 years, and increasing domestic manufacturing has continued to be one of the Biden Administrationâs central initiatives.
Some VCs and entrepreneurs feel a moral duty to decouple from Chinaâs government and economy. Interestingly, few political takes currently have this much range; you could say this at CPAC or on CNN:
(3) Finally, people want to work on cool stuff. The internet age has enabled massive value and wealth creation, and yet in many ways, it has let us down. Much of the past 30 years in Silicon Valley is a story of smart people getting other people to click on ads.
Our generation wants to work on things that have a bigger, more positive impact on the world. Recently, Trae Stephens of Founders Fund/Anduril and Markie Wagner of Delphi Labs admonished us to work on âGood Quests.â
Itâs worth a read and may get you excited to work on something in one of these sectors. Maybe you already are:
The world is filled with good quests that require massively leveled heroes to complete: semiconductor manufacturing, complex industrial automation, natural resource discovery, next-generation energy production, low-cost and low-labor construction, new modes of transportation, general artificial intelligence, mapping and interfacing with the brain, extending the human lifespan. These future-defining problems are hard to recruit for, difficult to raise money for, and nearly impossible to build near-term businesses around, which is why they are exactly the types of problems we need the most well-resourced players pursuing.
Itâs the best time to be in deep tech. Hereâs whatâs going on this week:
Pentagon's 'strategic capital' office focusing on 'deep tech' startups through SBIC initiative
Two months into its establishment, the Pentagonâs Office of Strategic Capital (OSC) is looking at ways to increase capital flows and market participation in deep technology areas â things like artificial intelligence, biotech and quantum computing â and is developing its first investment strategy, the officeâs director said today.
âHow do we give these technology entrepreneurs the opportunity to take their [science and technology] into products and services that not only support the national security mission but also larger economic prosperity?â
A16z hosts the first-ever American Dynamism Summit
Itâs a huge deal to have a legendary fund like a16z focused on hard tech startups that serve the national interest. They just hosted their first summit, with an all-star list of speakers: Katherine Boyle, Palmer Luckey, and more. Click below to watch the keynotes, which are all on YouTube.
One more thing
HmmmâŚ