New Tech Fund Focuses on US Manufacturing

Key Concepts:

• Seed and Series A funding in manufacturing and logistics.
• Renewed interest in industrial spaces from entrepreneurs and LPs.
• Long-term investment in industrial innovation for public market growth.
• Governmental concern over the decline of the US manufacturing base.
• Transforming industrial jobs into tech-enabled industries.
• Importance of strong founders in early-stage investing.
• Full lifecycle investing and commercial scale-up support.
• Disruption through technology in physical industries.

1. Investment Landscape in Manufacturing and Logistics

• Funding Size: $300 million is a significant amount for seed and Series A funding in manufacturing and logistics companies.
• Investor Interest: There's a resurgence of interest in US-based manufacturing and logistics from both entrepreneurs and Limited Partners (LPs).
• LP Perspective: LPs, including endowments, foundations, and large family offices, are investing with a 10-20 year horizon, seeking long-term returns and aiming to create new segments in the public markets through industrial innovation.
• Public Market Potential: Tech-first industrial companies have the potential to create a new segment of the public markets.

2. Governmental Focus on American Dynamism and Manufacturing

• Governmental Concern: There's increasing governmental concern (across multiple administrations) about the decline of the US manufacturing and industrial base.
• Historical Context: Labor arbitrage (sending jobs offshore) was a common strategy for US corporations to recover from financial crises like the dot-com bubble, but it led to underinvestment in technology.
• Competitive Disadvantage: The US has fallen behind in manufacturing and lacks the technology to be productive at the necessary scale.
• Tariffs: Tariffs are part of the effort to support American dynamism and local manufacturing.

3. Focus on Technology and Workers

• America First: While there's an "America First" aspect, the focus is primarily on technologies and workers.
• Competitive Jobs: The goal is to create competitive jobs that start from the "brass tacks" and improve the daily work experience, ultimately benefiting the economy.
• Industrial to Tech Transformation: The vision is to transform industrial industries into tech industries, similar to the IT sector's growth since the internet's emergence.
• Technology Integration: Many industrial jobs are not yet connected or built on mobile technology, presenting a significant opportunity.
• Technical Debt: The neglect of technology in industrial sectors over the past 25 years has created a substantial "technical debt" that needs to be addressed.

4. Early-Stage Investment Criteria and Strategy

• Founder Quality: Early-stage investing heavily relies on identifying incredible founders who can move quickly, something larger companies often struggle with.
• Acquisition and IPO Potential: The firm considers whether companies can be acquired or go public in the future.
• Full Lifecycle Investing: The firm positions itself as a full lifecycle investor, providing support from the early stages through commercial scale-up and potential public market exits.
• Disruption Focus: The investment strategy focuses on identifying gaps in the economy and applying technology to physical industries where the US has strengths.

5. Notable Quotes

• "These tech first industrial companies can create a whole new segment of the public markets that hasn't really been appreciated today."
• "...it's been woefully neglected for the past 25 years, and that's a lot of technical debt we have to dig ourselves out of."
• "...the early stage investing sector is really built on incredible founders, incredible founders that can move at a pace that they just couldn't do inside a big company or the big companies cannot do on their own."

6. Technical Terms and Concepts

• Seed and Series A Funding: Early stages of venture capital funding for startups.
• LP (Limited Partner): An investor in a venture capital fund, typically institutions like endowments, foundations, or family offices.
• Labor Arbitrage: The practice of moving jobs to countries with lower labor costs.
• Technical Debt: The implied cost of rework caused by choosing an easy solution now instead of using a better approach that would take longer.
• Full Lifecycle Investing: Supporting companies from early stages through growth and exit.

7. Synthesis/Conclusion

The transcript highlights a renewed focus on investing in US-based manufacturing and logistics, driven by both economic and national interests. The key is to transform these industries by integrating technology, creating competitive jobs, and supporting strong founders. The long-term vision is to create a new segment of the public markets through industrial innovation, addressing the "technical debt" accumulated from years of underinvestment. The investment strategy emphasizes identifying disruptive technologies and supporting companies through their entire lifecycle, from early-stage funding to potential public market exits.