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Bypass politics; invest to change the world
Team Beyond
October 04, 2023
3 min read
The big picture: Back visionary founders solving global challenges: it's the blueprint for a brighter future.
VC and Government
● Speed and scale: Moderna was able to quickly develop and mass-produce a COVID-19 vaccine in record time. While the U.S. government provided Moderna research funding and purchase orders, venture capital seeded the initial R&D and directly financed scaled-up production (6.)
● Economic growth: VC-backed companies have added jobs at 8x the rate of non-VC backed companies over the last ~30 years (1.) Government projects, such as infrastructure development, do create jobs, but often with longer lead times and less adaptability to market changes (5.)
● Bold causes: Companies like Firestorm Labs boost security for the US and its allies by taking on ambitious challenges like the mass production of autonomous drones. The U.S. government identifies and prioritizes security needs, yet it tends to turn to VC-backed builders like Firestorm to deliver affordable solutions at scale.
Chad McCoy of Firestorm shares:
“Without VC investment, many DoD-focused technologies would never get past the ideation stage. DoD de-risks VC and vice-versa, BUT both institutions have a risk aversion, so the larger companies continue to thrive through IRAD and inflated past performance. Small companies have transformational IP, which is why they get acquired in order to compensate for the primes’ lack of new ideas. DoD needs to feed the true innovation ecosystem instead of going back to the abusive relationship of the large defense primes. VCs need to get back to their roots and earn their stripes by taking risks and stop waiting for multi-year contracts to feel satisfied that they will achieve a satisfactory return. The bottom line is that risk is the crucial component. Stop spiking the football around sure bets.”
VC’s Flaws
● Exclusivity: 45% of all venture capital funding in the U.S. was directed towards companies based in California(4), leaving innovative startups in other states and countries underfunded or entirely overlooked.
● Misaligned timelines: There’s a gap between investor expectations and GTM timelines in hardtech. VC-driven bubbles emerge as they vie for saturated niches, driven by FOMO, leaving transformative innovations unnoticed.
● Susceptible to hype: Theranos infamously raised VC funds at a valuation of $9 billion, all while disguising off-the-shelf blood tests as the result of a breakthrough technology. Forrest Underwood from the Academy Investor Network explains VC’s dilemma with hardtech, noting, “while most VCs feel comfortable underwriting the technology risk, many are not equipped to underwrite execution and market risk in the government. That’s because very few of them have been successful operators in hardtech spaces, particularly federal GTM.”
Venture Capital with Purpose
VCs have the power to champion startups that serve the greater good. Here are three pivotal strategies for VCs to shape the future:
● Invest in the Material World: While software firms excel, those bridging the digital-physical divide shine brighter. For groundbreaking innovations like semiconductors and rocket engines, back startups that redefine our interactions with the physical world. Consider Dexory and Kayhan Space as examples.
● Become Experts in New Markets: “VCs understand enterprise SaaS businesses and consumer marketplace models better than anyone on the planet,” Forrest Underwood chimes in, “If they want to really move the needle where it matters, they need to become just as competent in these new markets.”
● Spot Authentic Leadership: Firestorm Labs' Chad McCoy, an ex-SOF leader, leverages his experience to pioneer transformative products. Invest in genuine leadership for game-changing outcomes.
Beyond, a forward-thinking public VC firm, actively employs these strategies to curate a transformative portfolio. Interested in building a portfolio of world-changing companies?