For projects requiring hundreds of millions, fundraising should be split into phases. The initial "pre-industrialization" phase, focused on proving technology, is suited for venture capital. Later phases for manufacturing and scaling should target project finance structures with debt/equity combinations and strategic partners.

To prevent promising startups from failing from funding gaps—the "Valley of Death"—the DoD actively "crowds capital" around them. This stack includes rapid R&D contracts, manufacturing grants, and low-cost loans from a $200B lending authority.

Unlike software, hard tech involves long scale-up timelines and high capital costs. Founders must specifically seek the small subset of investors and partners who understand the market context and have the risk appetite for massive, world-changing opportunities, rather than trying to appeal to all VCs.

There's a critical financing gap for early-stage hardware companies. Venture debt firms avoid CapEx-heavy, unprofitable startups, while traditional banks require positive cash flow. This forces founders to either dilute themselves with expensive equity for equipment or risk their personal assets.

VC funding provides crucial leverage for securing non-dilutive grants. Many government grants operate on a reimbursement basis, requiring startups to spend capital first. Venture funding provides this necessary upfront cash, enabling hardware companies to access a powerful, complementary source of capital.

Unlike software startups that need revenue growth, deep tech and hard tech companies (e.g., building nuclear reactors) can secure large Series A rounds by demonstrating progress against scientific or engineering milestones. This marks a return to milestone-based funding for capital-intensive ventures.

For ambitious projects like surgical robotics with long development timelines, relying solely on traditional VC is risky. RoboCath found that bringing in corporate investors provided a long-term strategic vision and reassured other shareholders, which is critical for survival.

Breakthrough technology companies in strategic sectors are often too risky for traditional VC but cannot sustain the debt-based instruments offered by most government programs. This creates a specific "equity valley of death" that stifles innovation in critical areas like rare earths.

Shkreli argues that revolutionary hardware ventures require exceptionally long time horizons, making traditional VCs unsuitable partners due to their fund cycles. He suggests targeting corporate investors who understand and can stomach a 15-20 year development runway.