The VC landscape has dramatically shifted, with Physical AI funding reaching $45 billion in H1 2026, up from under $5 billion in 2023. This counters the long-held VC belief that hardware startups are too risky, margin-thin, and susceptible to copying by competitors.
The media landscape has evolved from journalist-led reporting to a new era where audiences prefer direct insights from domain experts actively working in the field. This "third era" values real-world experience over traditional reporting, creating new opportunities for practitioner-led content.
The transition to a fourth venture fund marks a critical milestone where a GP's performance is no longer theoretical. By this stage, they have a tangible track record from their first three funds that LPs will scrutinize, making fundraising significantly more data-driven and challenging.
Startups like Knox Metals are finding massive opportunities in legacy industries. The $200 billion metal servicing market, for example, employs fewer than 40 software engineers, creating a ripe environment for a software-led platform to introduce efficiency and capture significant value.
Historically, the biggest hurdle for startups selling to the government was the long sales cycle. Now, with faster procurement, the challenge has shifted to execution. Small teams are winning large deals but then struggle to deliver, manage the influx of capital, and ensure contract renewal.
The prevalent narrative of Europe being over-regulated causes many US VCs to overlook it. This creates an investment arbitrage opportunity. For example, Zurich is producing world-class physics and quantum research but is dramatically undercapitalized, allowing investors to back top-tier talent at rational prices.
Instead of avoiding the EU's stringent regulations, startups can embrace them as a strategy. By tackling the hardest regulatory environment first, they build a compliant product that gives them a competitive advantage and makes future expansion into less-regulated markets much smoother.
Venture firm 776 uses the visceral internal term "skin rippy" to describe a deal they are so passionate about they want to "rip their skin off." This signals a level of non-consensus conviction that goes beyond standard diligence and serves as a cultural shorthand for a must-do investment.
The journey of a non-consensus investment often involves weathering intense public criticism before validation. StarCloud, an orbital data center company, was derided on websites dedicated to proving its stupidity, only to see a complete reversal in sentiment within six months from leaders like Elon Musk and Sam Altman.
A robust VC strategy is to identify an inevitable trend, like AI, and invest in the infrastructure that will power it. This means avoiding downstream applications, which are competitive, and instead focusing on upstream suppliers that the entire ecosystem will depend on, ensuring relevance regardless of which application wins.
Founders may feel betrayed when early VCs sell shares, but it's often driven by fiduciary duty, not a loss of faith. To raise later funds (e.g., Fund IV/V), VCs must show LPs real cash returns (DPI). This forces them to take some money off the table, even from their best-performing companies.
Smaller, early-stage funds with limited capital for follow-on rounds can use their pro-rata rights strategically. Instead of exercising them from their main fund, they can offer the allocation to their LPs as co-investment opportunities, driving millions in additional capital to their best companies.
A decade ago, the smartest engineers were drawn to high-paying jobs in advertising technology. Today, there's a significant talent migration towards deep tech sectors like aerospace. Engineers are now seeking mission-driven work where they can build tangible things and feel connected to a larger purpose.
The debate over AI data retention goes beyond technical security. For a VC, uploading sensitive founder data like cap tables into a third-party AI model is a breach of trust. It tests their ability to uphold their commitment to confidentiality, making data sovereignty a core issue of integrity.