I think the ones that stay relevant consistently do two things: love the process of pursuing greatness, and continuously evolve their edge.

LeBron James, now 41, talks about his love for the process of playing basketball at a high level keeping him relevant.

Jamie Moyer played professional baseball until he was 49 and at the time of his final game had the most wins, losses, and strikeouts of any active MLB pitcher.

In Moyer’s case, staying relevant for so long meant finding an edge any way he could, even when his physical talent had diminished. From the Society for American Baseball Research:

“Moyer’s changeup could make his low-80s fastball look like a high-80s fastball. Besides changing speeds, he kept hitters off balance by constantly moving the ball up, down, in, and out. The crafty lefty also used psychology to his advantage. He often approached the batter’s box in between pitches and talked to the hitter. “As a hitter, that would drive me crazy,” said Boone, “but as a teammate I loved it.”24 The unusual tactic was one example of Moyer getting an edge any way he could.”

The similarities between athletics and entrepreneurship abound. Markets change. Talents evolve. Networks grow and shift. But if you want to stay relevant, one needs to love the process and consistently evolve their edge.

And of course, have fun doing it!

With this approach, the small wins along the way end up becoming the markers of success. You’re helping your friends win! Things like Radiant Nuclear moving into the DOME after nearly a decade of hard work and planning, Harry O’Connor being awarded the Thiel Fellowship, and Grounded shipping Colgate’s Bright Smiles, Bright Futures fleet that increase access to pediatric dentistry services.

Selfishly, this also makes the day to day grind of entrepreneurship and investing more enjoyable. Early stage investing has a long feedback loop, so strictly optimizing for outcomes is a way to either make short term-oriented decisions or burn out.

Choose hard problems. Back good people. Celebrate the wins with them along the way.

A good vision is “A thousand songs in your pocket.”

A vision is NOT “Everyone in the world will have free electricity.”

A good vision is “shooting stars daily that return critical materials that improve life on earth.”

A vision is NOT “a future where we have abundant resources for all.”

A good vision is simple, tangible, and exciting. If a vision is obvious, it’s likely not that visionary. If it’s intangible, it loses meaning.

Founders that set a clear vision well hire better, raise capital more easily, and ultimately find success at a higher rate.

Iterate. Find your message. Then tell it on repeat!

As VisiCalc (and eventually Excel) proliferated, what remained as unfair advantages were relationships, insights, information (collectively, “Intangible Assets”). If you had better information on a business’ growth prospects, your Excel model would prove more accurate. If you had unique relationship, your purchase price in the model might be advantaged.

The same thing is happening now with AI and knowledge work. If we trust the analogy, then we know the volume of knowledge work is about to explode (I recognize the irony as I write a weekly blog, full of words). As a result, insights, information, and relationships are more valuable than ever.

In this new paradigm, it’s a company or investor’s Intangible Assets that will create an unfair advantage—unique information that feeds the tool, the way one uses the tool to move faster, and the relationships and reputation one builds that AI cannot automate away.

• The future will be better than the present;

• Technology will take us there; AND

• The craziest (sounding) ideas tend to be the most impactful.

The challenge on point three is striking the line between optimism and delusion. Is Company X a camera company or a “distributed global intelligence network”? Is Company Y “elevating global consciousness” or are they just a real estate sublessor? I could go on…

The bright line test is the specificity with which a founder can articulate what must go right along the way for them to win. “But what if it works?” is fine. “Here’s the playing field and the calculated risks we’re taking along the way” is much stronger. Hyperfluency on the messy middle of a company tends to distinguish the dreamers from the winners.

Happy hunting!

We talked about what makes a great cold email (and when a warm intro might be worthwhile if you can swing it), what I hunt for when a new deck comes through, the distinction between pretty and well-designed, why I’m trying to lean more into consistency of principle than judging whether something is the “right” answer, how we think about diligence at a concentrated fund – and why you should reference us back the same way we’re referencing you. We also got into the importance of strong relationships through the whole process, which is really what most things come down to. Mat put together a great first batch of investors for the series, and there are a lot of easter eggs in those conversations – give it a listen if you have a few minutes!

Every investment, every factory, every startup, and every specialization of labor is fundamentally a bet on tomorrow. If people stop believing that tomorrow will be larger, they stop deploying capital and start protecting it.

Adam Smith’s Wealth of Nations is often reduced to the idea of the “invisible hand.” But the real engine in Smith’s work is productivity growth. His famous pin factory example shows how specialization dramatically increases output. Break a process into small tasks and let people get good at them. Suddenly one factory can produce thousands of pins a day instead of a handful. Multiply that dynamic across an entire economy and you get growth.

But for that to happen, people need to believe the future is worth investing in.

A merchant builds a factory because he thinks demand will grow. An engineer specializes because she thinks her skills will matter. An investor funds a startup because, against all statistical evidence, it might actually work.

Take away that optimism and the system stalls. Which means optimism is not just a nice cultural trait. It is economic infrastructure.

If capitalism depends on optimism, then societies need to create reasons for it. New technologies, ambitious companies, scientific breakthroughs, and visible progress all reinforce the belief that the future will be larger than the present (we’ve written a bit about this in the past). The job of builders, founders, scientists, and investors is to make that belief rational.

We first met Shaur as part of our initial investment in Northwood in 2023. When we asked a mutual friend about him, the friend was unequivocal—“Shaur’s the smartest person I’ve ever met. Also the kindest.”

Close to 3 years since that first interaction, our lived experience has proven that friend’s assessment remarkably accurate. In that time, he helped take Northwood from inception through a $100M Series B, scaling the org from 3 co-founders to over 60 FTEs. Last year, the market also took notice of his contributions, with him receiving the Matthew Isakowitz Rising Star award and being named to Forbes 30 Under 30.

From day one Shaur’s been generous with his time and network, sharp and thoughtful with his technical and market insights, and a staunch supporter of Also Capital and our broader community. Most importantly, he’s values-aligned with everything we stand for–high integrity, low ego, and finding joy in the daily grind of solving hard problems. Bringing him into the fold in a more intentional way was a no brainer.

Shaur joins Will, Colin, Jamie, and Daniela, our incredible group of Venture Partners whose lived experience helps them understand the challenges and complexity of building in Hard Tech. They’re an amazing resource to us and our portfolio companies as they navigate hiring, fundraising, strategy, and manufacturing at scale.

A fun fact about Shaur: at one point he served as a volunteer firefighter, graduating as valedictorian of his fire academy class – a small glimpse into the kind of intensity, commitment, and service mindset he brings to everything he does.

Welcome to the team, Shaur!

About Shaur

Shaurya Luthra is a technology leader and entrepreneur focused on solving one of the space industry’s most pressing challenges: scaling ground infrastructure to handle the rapidly increasing volume of satellite data. As Co-Founder and Head of Digital at Northwood Space, he is building software-defined ground networks that enable high-throughput, pervasive satellite communications at global scale.

Before founding Northwood Space in 2023 with Bridgit Mendler and Griffin Cleverly, Shaur worked on advanced space systems at Lockheed Martin Space and Capella Space. His career spans satellite communications, RF systems, and scalable aerospace software — all focused on enabling the next wave of commercial space innovation.

At Northwood, Shaur is driven by the belief that reliable, scalable space connectivity infrastructure is foundational to unlocking transformative applications for science, industry, and humanity.

Shaur’s dedication to meaningful impact has been recognized by the Matthew Isakowitz Foundation, where he was named a 2025 Rising Star and as a selection for Forbes’ 2026 30U30. His journey into space technology began with a strong sense of purpose instilled by his family and community after moving from India to the United States. He pursued his passion for space at Cornell University, earning both a Bachelor of Science and a Master of Engineering in Electrical and Computer Engineering.

Judgement is the ability to effectively allocate time, capital, and talent under uncertainty. Startups are information sparse environments. Data is incomplete and often misleading. Strong founders make directional decisions with imperfect inputs and adjust without flailing. They understand which variables matter and which are noise.

Character determines whether a founder takes responsibility or looks for cover. Things break. Revenue misses. Key hires leave. Good investors understand this. Character shows up in how founders respond to these pressures, conflicts, and setbacks. Teams can tolerate bad news. They cannot tolerate volatility at the top.

Integrity ensures that internal reality and external narrative align. Early stage companies run on trust. Investors, employees, and customers are betting on the person. If internal reality and external narrative diverge, trust erodes. Once that happens, everything becomes more expensive.

Ambition is the desire to build something meaningfully large and the stamina to pursue it over a decade. Not performative vision, but scale of intent.

Test for them early, look forward examples. And as a founder, hone this skills through your actions and reflection. It’s the real key to long term success!

Our first fund, a 2023 vintage, backed 14 core investments. These were intentionally concentrated, high conviction bets on engineering-led teams. Since our initial investments, those companies have generated significant momentum, including:

• Winning a $50M Space Force contract;

• Shipping optical hardware to customers;

• Earning feature coverage in The Economist; and

• Demonstrating emergent behavior in robotic systems.

Meaningful market validation has followed this early, but tangible, progress. Although this portfolio is less than three years old, all 14 core investments have raised at least one round of follow-on capital, totaling more than $260M in aggregate.

We run a concentrated strategy because we believe early-stage investing rewards depth over breadth. We aim to work closely with a small number of founders and support them aggressively as they scale. So far, that approach has been fruitful, and we believe this is just the beginning.

From a market perspective, we see this moment as the front-end of a much larger wave. Compute is accelerating solutions to unsolvable problems. Communication is expanding coordination globally and beyond. Autonomy is redefining what can be done without human constraint. These are the foundations of the next economic era. The convergence of these three forces will define the next generation of category-defining companies, reshaping national competitiveness, industrial capacity, and everyday life. This is the world we want to help build. And it’s why we’re scaling up.

With our second fund, we’re expanding our ability to back founders early and support them more deeply. We’ve grown the team and expanded our operational capacity to better serve the next generation of builders, from first check through follow-on rounds. Our goal remains the same: be high-conviction, day one partners to serious founders tackling hard problems.

We take our work seriously. We just don’t take ourselves too seriously. To celebrate our second fund, we decided to have a little fun with the announcement, so we made a movie poster celebrating our founders :)

Mesh’s initial product, the Alpha C1, is an optical transceiver that linearly translates electrical signals to light at 1.6 Terabits per second and delivers better power efficiency, lower latency, and higher reliability for AI workloads and power-constrained data centers and, critically, is designed and manufactured in Los Angeles, CA (cCheck out the production video here).

From the Mesh team:

“Photonics today often focuses on advanced design and treats high-volume production as a downstream exercise. That model slows the feedback loop between device physics, packaging, yield, and automation. At Mesh, we believe the future of photonics depends on integrating design and manufacturing under the same roof.”

Across our portfolio we’re heavily invested in the idea that the biggest winners in Hard Tech will be those that tighten the loop between design and manufacturing of complex systems. Doing so accelerates development and improves product design, and is the best way to rapidly meet the urgent demand for the building blocks of compute, communication, and autonomy that are the foundations of our economic future.

Above all, we invest in people, and Travis, Cameron, and Serena are incredibly special humans. Prior to co-founding Mesh, the team spent years at SpaceX building critical hardware and software control systems for inter-satellite links (ISLs), a key enabler of SpaceX’s Starlink constellation and their future ambitions for data centers in space. This work positioned them extremely well to start Mesh as it is one of the few domains demanding optical alignment and thermal stability comparable to optical interconnects like their Alpha C1.

Since raising their seed, they’ve quickly scaled the team to 15 people (a highly impressive SHIP (Speed of Hiring Impressive People) rate…) and began producing prototype units off their initial production line. Their technical leadership and vision has been amazing, and we’re excited to partner with them.

Congratulations to the Mesh team, we can’t wait to see what’s ahead!

“Competitive strategy traditionally emphasizes defensive "moats" such as patents, scale, or market power, yet such advantages often erode over time…firm endurance is better explained by cognitive intellectual capital and its integration into organizational architecture…[we] reframe competitive advantage as a dynamic, cognitive, and architectural property of the firm rather than a static defensive position.”

I’m not sure the above is particularly groundbreaking, but I think it’s the PhD-speak version of what VCs mean when they say “it’s all about the team.” We are, of course, broken records about this (see here, here, and here).

Armed with this information, what can one do about it? Overweight exceptionally strong EQ diligence relative to technical diligence. Find ways to determine whether this team can play the “middlegame” exceptionally well (to quote a recently viral piece). These people are rare. When you find them, lean in!

We’re now entering our third year running the program, built on a simple insight: give young, high-slope people real ownership, real capital, and real agency—and then get out of the way.

Here is the deal:

• $100K pool to invest in startups (or people!) at inception, or even pre-idea

• 3–4 scouts working together as a team

• 10 weeks over the summer in person in NYC, paid, with 100% of the pool’s carry payable to the scouts

• Great office space in Union Square or SoHo (TBD)

You and your teammates run the fund. We’re around to help when you want it. But this is not a class or a simulation. You are not sourcing companies for me. You are not trying to “push deals through IC.” You are sourcing companies for your fund. You’ll build a strategy, construct a portfolio, and make investment decisions with real money. You own the outcomes—and the economics ;). Scouts share carry on their fund, and we’re already seeing strong results (S’24 is at nearly 250% Gross IRR).

As usual, we’re not screening for a specific resume or background, but the non-negotiables are the same: humble, fast learner, independent thinker, and kind. No jerk policy!

Historically, it’s been a very competitive opportunity—700+ applications, 10–20 interviews, and 3–4 scouts selected. In past years, this was a “trust us, it’ll be worth it” kind of offer, but with two summers down, we have some stories to tell about where the scouts are now. You can read about the 2024 and 2025 Scout teams on the blog to see who they were when they joined. Since then, scouts have gone on to work at Palantir, lead product strategy at a Sequoia-backed Series B startup, found a company (where we co-led the Seed with Founders Fund), and last but not least, join Also Capital full-time.

If this sounds exciting, you’re probably our kind of person. We’ll teach you everything we can in 10 weeks, but the real goal is long term. A great Scout experience should be the beginning of a relationship with Also Capital and our community, not the end of one.

Applications are open now and will be reviewed on a rolling basis over the next few weeks.

Apply here: https://forms.clickup.com/9005108889/f/8cby3mt-1677/P1BBPI3TUSQHNCZXJG

We’re excited to meet you!

One might call this Founder Motivation. It’s one of the few things we can know with measurable certainty early on. Markets change. Products pivot. But a person’s background and internal drivers are stubbornly consistent. They determine how a founder behaves when things break not when things are going well.

If you don’t understand what shaped a founder and what they are optimizing for, you are not really underwriting the company. You are guessing how someone will act under pressure.

Everyone has a story. Understanding it does not remove risk, but it makes risk visible.

“We must remember that intelligence is not enough. Intelligence plus character–that is the goal of true education. The complete education gives one not only power of concentration, but worthy objectives upon which to concentrate.”

In venture, being a smart founder is pretty much table stakes. And intelligence is easy to spot in a pitch. Technical depth, speed of thought, clear reasoning. They’re all the indicators that someone is smart.

Character is harder to see, but it is what actually compounds over time. It shows up in how founders talk about failure, whether they take responsibility, and whether they are honest about what they do not know. It shows up under pressure, when things break and the story gets messy.

The founders we want to back have both. They are sharp and grounded, ambitious but responsible. Intelligence helps you build something. Character determines how you build it, and whether it lasts.

That combination is rare. When we see it, we pay attention.

It’s actually awesome. I’ve become a fan.

If you’re reading this and saying “what is Mike talking about?!”, you may not be alone. See below for more about the pop culture crazy that is the Netflix original movie K-Pop Demon Hunters, and check out this article for even more.

There IS actually a point I wanted to make about startups with this reference. And it’s about authenticity. If you haven’t seen the movie, the bottom line is this: K-Pop girl band saves the world from evil demons through song by accepting their authentic selves.

I’ve written about this idea of founder authenticity before, through a founder diligence lens and one about founder opportunity cost. It’s an idea that recurs. Time and again, we’ve seen authentic founders push through seemingly overwhelming odds, and inauthentic ones give up or take shortcuts when things don’t go their way. It seems to be one of the best bright line tests for whether a company will be successful in the long run.

Sorting this out can be challenging, but when you do it long enough you tend to develop a gut instinct for it.

So the moral of the story? Go listen to the K-Pop Demon Hunters soundtrack. It will brighten your day :)

But my view is that framing misses something more fundamental. When more capital is raised, the exit size goes up. What a $10B+ company requires in its earliest innings is very different than a $1B+ company. Very large outcomes are not just bigger versions of smaller ones. They are qualitatively different trajectories. Those trajectories demand a different optimization function at the start.

At the extreme end of outcomes, the early constraint is rarely idea originality alone. The constraint is whether the company can rapidly assemble a world-class team, attract disproportionate capital, and deploy that capital early enough to unlock a path that compounds at massive scale. Leadership and talent density matter more than the precise initial insight.

This is why some founders look “consensus” to investors. It’s not because the idea is obvious. It’s because the person is legible as someone who can recruit aggressively, make senior hires ahead of proof, raise large rounds before revenue, and carry organizational complexity far earlier than most startups ever need to.

If your goal is to build a $10B company, the first few years are not primarily about being right. They are about building an engine that can move fast once you are directionally right. That engine is people plus capital.

Earned insight still matters, but it matters differently. At smaller outcome scales, insight is the wedge. It is a sharp, asymmetric understanding that lets a small team outmaneuver incumbents with limited resources. At very large outcome scales, insight is often table stakes. The real differentiator is whether the company can turn partial insight into momentum faster than competitors by hiring better, spending earlier, and scaling decision-making without collapsing.

This explains a pattern that can look uncomfortable from the outside. Investors sometimes back founders with familiar pedigrees, repeat success, or obvious leadership gravity. Not because novelty is unimportant, but because these founders are more likely to survive the capital-intensive, coordination-heavy phase required to reach escape velocity.

In other words, early idea quality and early leadership quality do not scale linearly with outcome size. The bigger the potential outcome, the earlier leadership, recruiting, and capital formation dominate.

Non-consensus founders still win. Many of the most important companies in history started that way. But they often win by becoming consensus over time, by proving their ability to attract talent, command resources, and lead organizations well before the market fully understands the idea.

Seen this way, the consensus versus non-consensus debate is a proxy for a deeper question. What are you actually underwriting at the seed stage?

If you’re underwriting a $1 to $3B outcome, sharp insight and scrappy execution can carry you a long way. If you’re underwriting a $10B+ outcome, you’re underwriting the founder’s ability to build a high-talent institution under extreme uncertainty.

Different outcome targets require different things early. Confusion arises when we pretend they don’t.

A few reflections I have been carrying with me as the year closes:

Gratitude sharpens attention

Gratitude is often treated as something soft or sentimental. I think it is the opposite. Gratitude is precise. It forces you to notice what actually sustained you. The people who showed up consistently. The ideas that held up under pressure. The moments where reality contradicted your assumptions in useful ways. This year reinforced for me that curiosity paired with gratitude is one of the most reliable ways to stay grounded while building things that matter.

Most progress lives inside paradox

Whether thinking about AI, markets, or institutions, I kept coming back to the same uncomfortable truth. Many things are simultaneously true and not true. There is no clean resolution until you test them in the real world. The universe does not hand out certainty. It hands out clues. Progress comes from engaging honestly with that ambiguity rather than pretending it does not exist.

Institutions are made of people, not abstractions

It is easy to talk about government, regulation, or systems as faceless obstacles. In practice, every institution is a collection of incentives, trust dynamics, and human decisions. Real impact rarely comes from attacking systems from the outside. It comes from understanding how they work, engaging with patience, and building credibility over time. This applies far beyond policy. It applies to companies, teams, and families too.

Relationships compound quietly

One of the most reliable patterns I have seen is that relationships compound long after the initial interaction. The founders who followed up thoughtfully. The investors who offered help without expectation. The conversations that felt unimportant at the time but shaped decisions months later. Compounding does not only apply to capital. It applies to trust, reputation, and generosity.

Technology reflects intention

I spend a lot of time thinking about technology trends, infrastructure, and systems. Underneath all of it is intention. Technology is not progress by default. It becomes progress when it expands agency, creates leverage for real people, or opens doors that were previously closed. I am increasingly grateful for builders who think beyond novelty and toward responsibility.

Christmas Eve is not about conclusions or resolutions. It is a pause. A chance to acknowledge what held, what taught, and what still needs patience.

Wishing you a quiet, grounded holiday and a year ahead built with care.

Anyway…enjoy this week’s ABP :) - Mike

The last week has been busy for us on the funding announcement front. Four portfolio companies announced over $600M in follow-on capital raised:

• K2 Space ($270M Series C led by Redpoint)

• Radiant ($300M Series D led by Adam Draper and BoostVC)

• Vital Lyfe ($24M Seed led by General Catalyst), and

• River ($6M Seed led by Founders Fund).

This flurry of news had me reflecting on the purpose of a funding announcement in the first place. Here’s what I landed on:

Well crafted funding announcements help make a startup legible at a moment when attention briefly spikes. To customers, recruits, partners, and future investors, the announcement answers a simple question: Is this company real enough to bet time, money, or career capital on?

In the early stages, startups are illegible by default. There is too much noise and too little time. A funding press release compresses meaning. Credible people looked closely, took risk, and decided this company is worth backing. That signal matters far more than the dollar amount.

This is why “we raised $X” is the least interesting part of the story. What matters is why now. What changed? What is newly possible? What constraint was removed? The best funding announcements frame capital as fuel for a specific transition such as shipping a product, scaling distribution, or entering a regulated market, not as an achievement in itself.

Funding PR also functions as a coordination mechanism. It aligns the market around a narrative. Customers feel safer buying. Candidates feel safer joining. Partners feel safer integrating. Internally, it marks a shift from survival mode to execution mode. Externally, PR done well tells the ecosystem this company is entering a new phase of seriousness.

If you’re announcing a round, tell the market what you are about to do and why it would be rational to pay attention now.

Founders everywhere want to build for the government again. The hard part is getting the government to buy.

I saw this firsthand over my fall fellowship at Also Capital, so I wrote a short story about it.

WHAT IS GOVERNMENT is the story of a founder, Phil Stack, trying to sell his tech to the military. It’s based on 20+ interviews with folks including Delian Asparouhov, Eric Lasker, Nate Loewentheil, Connor Love, Daniela Perlein, and several other founders, VCs, GTM operators, and ex-military & govt officials.

In this story, Phil meets his investor (Angelica Rounds), his head of Government GTM (Max Clarence), and a procurement officer (Connie Tract). Through them, we learn all about the government that Phil encounters.

Meet Phil Stack, a founder.

Phil has just launched a start-up. The goal is to build edge deployable power systems through cutting-edge batteries.

But all that is secondary to the mission: building a great, American company.

Phil has quite the resume: several years at SpaceX, a stint at a start-up, and a master’s in materials science to boot. In his DNA are dual traditions of risk and service from engineer grandparents expelled from their own country, forced to start anew in the United States. Not as engineers – dreams left behind in dictatorial rubble – but as entrepreneurs, first with a corner store of their own, turned franchise, turned foothold.

But more than that, he’s borne witness to a changing world. It’s a world where government’s inability to deliver on promises – healthcare, education, infrastructure – have rent fault lines in his country asunder. It’s a world in which the US government is playing an active role in technology markets, for it is desperate for these tools.

Money and attention pour forth, creating a petri-dish upon which founders are multiplying. They are targeting customers ranging from the US Army to local school districts.

He feels proud to be one of them.

Phil finds that the oft-mythologized path to founder-hood holds true in most forms. As his hours are subsumed by bleary nights of code and pitch decks, expos and MVPs, happy hours and warm intros and cold calls, he remains awed at the whole endeavor.

He builds. His team builds.

And much of it hinges on the government buying his product.

He’s heard a lot about this government of his. He hasn’t been to DC since an 8^th grade field trip but has voted a few times. He feels at-once like an ardent supporter of the American project and at-once deeply skeptical. He’s been around tech long enough to witness a shifting culture around patriotism. Over hor d’oeuvres and beers, people have told him that the government is everything right with this country, everything wrong with it, and everything in between.

That it is at once friend and foe, obstacle and oxygen, and ultimately, customer.

So, Phil. What exactly is this government you’re trying to sell to?

Part 1: Government is Desperate

Angelica Rounds was connected to Phil Stack via an email forwarded by a friend of a colleague, the typical inevitability of happenstance that defines these early deals.

Her path into VC was as improbable as anyone else’s, a circuitous journey through the Air Force and a Wharton MBA. With a dollar, a hunch, and a newfound network of founder friends, she made her first angel investments. A few years later, with that hunch validated, she’s now raised her first fund, with the goal of backing founders bringing sorely needed innovations to all facets of government.

Her hunch is nothing new. Folks in all levels of government have been talking about the innovation gap for decades. She’s seen firsthand how the defense primes have run aground yet still maintain their stranglehold. Even as Washington turns over every year, Lockheed and IBM and Boeing, and their offices and factories across fifty states, don’t. The same holds true across all sorts of verticals, for city councils, school districts, police departments, clinics, pharmacies, and more.

But VC has finally caught up. A few moonshot bets in the 2010s, a narrative shift in the 2020s, enough to create a ripple turned wave, large enough that every VC in town had to launch their own government, defense, and hard tech theses to stay relevant. Subsequent start-up successes, from gold-standard mid-market acquisitions to Series rounds stretching deeper into the alphabet (all the way to the letters ‘I-P-O’) turned this wave into a veritable flood of capital. LPs, perhaps a few years late, are now clamoring for exposure to ‘Defense’ and ‘Government’ asset classes, unthinkable only a few years prior.

Angelica has managed to siphon a thimbleful of all this into her first fund.

The big VCs have armies of lobbyists and operators in DC devoted to their theses, sprawled across the administration and the Pentagon. Others even embed their own tailored government-sales teams onto portfolio companies directly. These VCs, her far-off competition, are no longer just betting on the future to come, they’re actively realizing the future they desire. When founders ask these VCs, ‘On day one, what can you do for me?’ it’s often easier for them to answer: “Let’s start with what we can’t do.”

Angelica doesn’t need all this. The big players need the headlines and soaring exits to justify the spend. But she just needs to execute a fraction better than others. It’s a patient strategy – there can be no other kind with government customers – and Phil’s deck scratches the itch she was waiting for.

In advance of their call, Angelica keys through Phil’s minimalist slides but finds her mind wandering. She’s sitting outside on her patio. The autumnal sun sings against the backdrop of crisp air, and its glare illuminates every fingerprint on her too-dark laptop screen. The specs of Phil’s batteries don’t go over her head – she’s done enough research in that sense – but she knows that the success of this investment will hinge elsewhere. She wonders what she will tell him that the other VCs won’t.

The big investors proclaim that it’s never been easier to sell to the public sector, that government is the best customer it’s been since World War 2. Those adherents need not look far to find evidence, from Executive Orders to billions earmarked in OBBBA and the NDAA for innovation, to Army Secretary Driscoll who put it more eloquently: “We cannot fucking wait to innovate until Americans are dying on the battlefield.”

But the VCs, of course, have to say this. It’s the only assumption that can close the chasm between the expectations of venture-level returns and the bitter realities of procurement. As start-ups multiply with promises of rockets and robots, she only senses that chasm growing wider. Plenty of observers instead say procurement reform is Washington’s white whale. Money alone, along with any number of alphabet skip-the-line mechanisms – OTAs, OSC, SOCOM, FUSE – cannot change fundamentally mismatched cultures.

Not for the first time, Angelica wonders where on the spectrum she falls. She pinches the bridge of her nose and tips her head back, letting the sunlight warm her closed eyelids.

Deep down, she thinks it’s a false spectrum. All the handwringing and hype obscure a simple fact.

If the government likes what you’re making, then you have a shot.

If any of its legions of program officers, legislators, generals, and CIOs have spotted your diamond in the rough and believe in it, then you have a chance to make it. Mentors and peers of Angelica’s who had sold to the government before, whether through In-Q-Tel, retired officials on their board, or just grit, have told her that once you make it, the government is the easiest customer a company will ever have.

She agrees with one thing – the government has never been more willing to spend its money on tools like Phil’s. Whether it happens or not is dependent on a world beyond her. But soaring deficiencies in every facet of public services may have finally met changing mindsets.

Perhaps when Angelica logs into her Zoom meeting with Phil in four minutes, what she’ll say is this: Selling to the government will never be easy, but the government is desperate for his product.

Perhaps that’s enough for a thesis.

Part 2: Government is Champions

January in DC is a grey month. A watery sun fights to be heard through wooly clouds, leaving the white marble facades of the nation’s capital, its stoic columns and monuments, bathed in tired light. The dryness in the air violently contrasts with the now-forgotten summer’s swamp. Metro cars are filled with cracked lips and fraying coats.

“One more time,” Max Clarence says to Phil, sitting in a nondescript Tatte a short Uber away from their meeting.

“We’re looking for our champions.”

The two sit face to face over a disintegrating pastry. Phil looks out of place in his suit and tie. Max knows it’s one thing when procurement folks, generals, or legislators visit the factory floors. There, they want to see the flip flops, the wild hair, the errant dry erase marker streaks. DC is a little different – he had to encourage Phil to get a haircut and wear a tie – but those alone make not a government vendor.

Max overlapped with Angelica years ago at Wharton. After she wrote Phil his first check, he was her first call. She said she had just met a bright founder with a product that would sell itself, if only he could help. A few site visits later, and Max quit his job to join the team.

Max has been selling things to the government for a long time. He knows better than to consider himself an expert. One of the perks of living in a democracy is that every piece of information you could want about selling to the government is a few ctrl-f’s away in some PDF. But years at his old company, nonetheless, honed him into something close. There, he was onboarded with a whirlwind presentation and laminated binder on the Pentagon’s alphabet soup of terminology. Soon thereafter, Max found himself sitting before Generals at the ripe age of twenty-eight.

“Just so I’m clear,” Phil says in between sips of a lukewarm flat white. “There’s two parts to all this. The first is finding someone who wants what we’re building. Check. And the second is just finding someone who’ll let them pay for it?”

Max thought the word just was doing a lot of heavy lifting there, but Phil was essentially right. His batteries performed well at early expos, enough that they had gotten an on-base pilot. That side-by-side feedback, by the hour for a whole week, transformed a flimsy proof-of-concept into something viable.

“I’ve seen a lot of these processes blow up.” Max says. “I’ve seen Admirals and CIOs gush over a pilot program and still wait years before they get their hands on it. It’s the same question every time: Did you find someone willing to stick their neck out for you?”

“Thanks for the vote of confidence,” Phil says dryly. He takes another sip. “So. What exactly makes a champion?”

Phil has landed on the question that people spend their entire careers trying to answer.

The optimist in Max believes it’s mission-alignment, from a school district to the military. Will operators use your tool? Did you sit shoulder to shoulder with them and offer respect for their expertise? Will you match the culture you’re entering? If so, they’ll bend over backwards for you.

His cynical side says something else. Relationships and expectations are everything. People won’t do shit for you if they don’t know you. A friend of a mayor, even a bought friend, trumps a superior engineering team every time. Every program officer is evaluated on whether they spend their budgets. It’s a black mark if they don’t, and they all have a smorgasbord of easier things to spend on.

And the romantic in him still says it’s conviction. A true believer. Someone with the conviction to do a hard thing because their country and community need it. He knows there are change agents in every agency. He’d spent months trying to convince skeptics before, industry veterans with decades-long careers who would never budge. But with the right champion, none of it mattered.

“You’ll know them when you see them,” is all Max says. “Come on. Let’s get going.”

They put their coats back on and toss out the wax paper wrapping, a few crumbs spilling in the process.

“Next stop: Program of Record, am I right?” Phil says with a chuckle.

“Ha. Right.” Max replies.

As they step into their Uber, though, Max once again wonders about the road ahead, one that feels fundamentally at-odds with the expectations Angelica and their investors have of them.

There are number of GTM models he knows they could pursue. The dream, of course, is a contract to sell their tools at scale. But the milestones on that journey are few and far between. Along the way, it would become his job to sell these thin milestones to investors. IDIQs, OTAs, he increasingly sees TechCrunch articles trumpet these as signals, but he knows that these are not revenue. The opportunity to maybe, eventually sell is not revenue.

Yes, there are other models. Great start-ups can grow into lean R&D labs, pick up SBIRs left and right, or get acquired for parts. But there are not-only high, but fast stakes to a venture dollar. What payoff do Phil and Angelica expect from him?

Their Uber arrives and they begin the long walk to their assigned entrance. But today, as Max empties his pockets and takes off his coat for security, ID in hand, he feels optimistic.

From what he’s heard, the program officer they’re about to meet, Ms. Connie Tract, might just be their champion.

Part 3: Government is Skeptical

Every morning on the walk to the elevators, past swarms of suits and pencil skirts, Connie Tract passes by a water fountain. It’s the fancy kind with a sensor-enabled faucet and a running tally of plastic bottles its saved. A sign above reads: “Please do not wash dishes here.”

Connie hasn’t used the fountain in years. She only notices it when she escorts guests to her office. It’s a high security building, after all, and she has built the habit of meeting guests in the lobby to avoid the inevitable security hold-ups. Some of her guests will notice this sign and furl their eyebrows. Even fewer will ask about it.

Her meeting for that morning, CEO Phil Stack, is one of those few.

She almost never gets to meet the companies directly. To her, the Pentagon’s many vendors remain numbers on a spreadsheet. Her job is to manage a sliver of the budget that Congress sends over every year. A hundred people clamor over every $1 sent, trying to showcase their project’s urgency. It’s her job to help steer that dollar into a contract.

Someone higher up the pipeline must’ve really wanted Phil to get this dollar. That, or it was Phil’s partner, Max Clarence, who somehow knew her boss three doors down.

“What’s with the sign?” Phil asks.

Connie always responds the same way her boss did when she first asked.

“Why do you think it’s there?”

Max pauses, as though he’s worried it’s an evaluation. It isn’t, of course, but the joys in Connie’s job are few and far between.

“I don’t know. There’s a kitchen around the corner?”

“It’s because someone, at some point, tried washing their damn dishes there.”

Connie has worked at a program office in the Pentagon for a decade now. She left Indiana University with a master’s degree in public policy and a fervent, if not vague, belief in making government work better. A mentor had told her about a Presidential Management Fellowship opening at DOD, and years later, she’d stuck around.

But those first years were hellish. Dreams of the cutting-edge ran face-first into the bureaucratic wall. Years later, she was still closer to the bottom of the totem pole. But it wasn’t nothing. She’d cut her teeth over the years, pushing paper and acing every course she’d taken at Defense Acquisition University (a name she initially thought was a joke before realizing it was an actual school). Now, whenever she hears from twenty-eight-year-olds in Allbirds, she knows what to listen for.

But Phil, to his credit, was already doing better than most.

Think piece after think piece excoriate procurement, the sheer capture by the primes, the constant pressure from above and below the hierarchy on every decision. Connie should know, she’s contributed to more than her fair share of articles for Brookings and CSIS and the like. She counts every start-up contract that she’s pushed through as a career achievement. She’s not one to miss brilliance.

But that’s the problem with the Valley types. They think brilliance is enough.

What they don’t understand is that government is hard. The military is hard. She’s not one to be grandiose, but this much is true: lives are at stake. These are billions in taxpayer dollars. These technologies are expected to support operations at an incomprehensible scale.

There’s an inherent difference at play as well. A company’s concern is its bottom line. But for the military and government, it’s the mission. Disdain for the documentation, the paperwork, the meeting minutes, it all translates into disdain for something far greater.

These things exist because someone, at some point, tried to wash their dishes in the water fountain.

The trio arrives at her office, which Connie has decorated to the best of her ability. A Hoosier pendant hangs limp on the wall behind her; she keeps forgetting to grab the tape from down the hall.

They get into the business at hand, which is a mere sliver of the months-long gauntlet Phil and Max will have to endure. She feels compelled by this team, though, not only because of their tech, but because it feels like Phil respects the world he’s entering.

She wants to believe him. She certainly believes the numbers, the testimonials, and the vision.

But there’s a bigger question at hand.

Phil and his peers’ companies are perched upon this premise: that start-ups can make do on promises to revolutionize government services. That their products – cheaper and better than those of the primes and incumbents – can carry this weight on their shoulders.

The government is skeptical of that promise.

It’s not skeptical out of a desire for dismissal. No one likes the primes; everyone shares the same dreams of innovation.

But it’s skeptical by design. Feature, not bug. Interoperability matters with 2 million uniformed personnel. Materials sourcing. Data security. And if we go to war, what then? How many Programs of Record should they be handing out? What’s Phil going to do, power the US military with his Series Q?

She’s being glib. It’s hard not to be in the thick of the bureaucratic maelstrom.

Connie knows her job is to be risk averse, because the end users are taking the greatest risks of all. Arguments about the degree of skepticism, the degree of risk aversion? She knows these are fair. Lord knows how often she’s stuck her neck out to move this needle. She agrees that too many incumbents, who snuck past the finish line a century ago, have been free to overpromise and underdeliver for decades, leaving taxpayers to foot the bill.

But degree is a hard question. The continuous vs. the discrete. When people call for reform, it begs the follow-up: what level of risk are you willing to accept?

Today, though, as Phil explains his integration of the latest feedback from the General, the potential commercial applications for his dual-use batteries, and the supply chain changes they’re exploring to comply with Federal Acquisition Regulations (FAR), she thinks she knows.

Maybe cautious excitement is the right answer.

“Anything else?” Phil asks.

“Let’s talk next steps,” Connie replies.

Part 4: Government is Mission

At this point in the story, there are several directions Phil’s start-up might take.

Perhaps he succeeds. With the help of Connie Tract, the company eventually receives an OTA, through which they pen their first revenue-bearing contracts. After a few more rounds of fundraising, hiring, and spending, these contracts grow until his start-up is no longer a start-up and is a respected vendor to a slate of government and commercial customers. Ten years later, they’re addressing America’s most pressing questions: edge-power, grid revitalization, EVs, and more.

Angelica follows on from her pre-seed check, building a burgeoning fund off the company’s success. Max Clarence now commands a GTM army out of DC. Connie’s eye for winners and her steady hand in navigating bureaucracy catapult her through the ranks.

But let’s not mince words. It’s a tough business, and perhaps Phil’s start-up burns in the proverbial valley of death. Even with an OTA and future fundraising, any number of crises might derail them. Maybe their ultra-cheap batteries were no longer so cheap once they couldn’t source from China. Maybe a handful of pilots was one thing, but the sheer scale that operators demanded remained out of reach. Maybe Phil enjoyed the temptations of multi-million capital raises a little too much.

In the event of failure, the most likely outcome, some might say that the government screwed up, that it lost out on a great innovation by not supporting a team ready to deliver. Others might say the government did exactly what it was supposed to do, ensuring taxpayer money was spent on reliable products.

But ultimately, people at every stage of the pipeline were exactly that: people. They navigated complex and often limited decision landscapes. They took risks – risks that may have looked inconsequential to one another but were meaningful nonetheless – and stuck by them.

The government is a lot of things as a customer. It is desperate, it is champions, and it is skeptical.

But ultimately, it’s driven by mission, not all too different from the start-ups trying to sell to it.

Acknowledgements

This series would not have been possible without the many people who took the time to chat: Delian Asparouhov, Nathan Bergin, Matej Cernosek, Corey Jacobson, Zak Kirstein, Eric Lasker, Troy LeCaire, Nate Loewentheil, Connor Love, Michael Lumley, Arul Nigam, Daniela Perlein, Navneet Vishwanathan, Ellen Waters, Pat Williams, and more.

Thanks also to Mike Annunziata and Brandes Woodall at Also Capital for giving me the best crash course in VC and early-stage tech I could ask for. They’re doing great work and it was an awesome experience to tag along for the fall.

About the Author

I’m Atharv and I’ve spent my life studying the intersection of tech and government. I researched India’s digital payments infrastructure as a Rhodes Scholar at Oxford, liaised with tech start-ups at the US State Department and the World Bank, and spent this past fall as a fellow at Also Capital. I’m also a writer, with a newsletter about movies, and an ongoing novel about the British East India Company in 18^th century Bengal.

You can get in touch with me at atharv.gupta@gmail.com.