Four years ago, the semiconductor industry was a closed loop. Today, it is a high-stakes game of geography. Etched, the AI chip startup currently valued at $5 billion, just cleared a major hurdle: TSMC has successfully manufactured its first chip. As the company prepares to ship systems this summer, the real battle begins. It is the battle for capacity.

Most startups struggle to secure space at TSMC’s crowded Taiwan factories. Etched is no different. But they have an ace in the hole. It is a firm called Copper Sky Capital, and its founder, Jack Selby, has a very specific promise: he can help them build in Arizona.

The Arizona Advantage

Selby is a veteran of the PayPal mafia and a longtime managing director at Thiel Capital. In 2021, he launched Copper Sky—formerly known as AZ-VC—with a $115 million fund. His original thesis was simple. Coastal startups in California and New York were overpriced. The Southwest was a bargain.

That thesis has evolved. Selby is no longer just looking for cheap deals in the desert. He is using his seat on the Arizona Commerce Authority to bridge the gap between high-growth coastal hardware firms and the state’s burgeoning semiconductor infrastructure.

When Copper Sky invested in Etched’s $120 million Series A two years ago, the allocation wasn't just about capital. It was about access. Selby offered a bridge to the local TSMC GIGAFAB. For a startup desperate to scale production, that is more valuable than cash alone.

A New Model for Venture Capital

Selby’s approach is a departure from the traditional venture model. Most firms provide capital and board advice. Selby provides a supply chain. He is betting that the next generation of hardware and defense companies will be defined by where they manufacture, not just what they invent.

"When Copper Sky invested with Etched, the company clearly understood our connectivity to the Arizona semiconductor industry," Selby told TechCrunch. It is a powerful pitch. It turns a venture firm into a strategic partner in the physical world.

Scaling Up

Copper Sky is not slowing down. The firm is currently raising a $300 million second fund, according to recent regulatory filings. This new capital will allow Selby to chase larger, more expensive coastal companies. He is particularly interested in the defense sector.

He wants companies that can move their manufacturing to Arizona. It is a bold strategy. It requires deep political and industrial ties. Selby has both.

Key Takeaways

  • Strategic Access: Copper Sky secured a stake in the $5 billion startup Etched by leveraging connections to Arizona’s semiconductor manufacturing ecosystem.
  • Supply Chain as Equity: Selby’s investment thesis centers on helping coastal hardware startups relocate production to the TSMC GIGAFAB in Arizona.
  • Fund Expansion: Copper Sky is currently raising a $300 million second fund to target larger, high-growth hardware and defense companies nationwide.

What This Means for Hardware Startups

The era of the "software-only" startup is fading. Hardware is back. For founders, the challenge is no longer just writing code; it is securing silicon. Selby’s model suggests that the most successful VCs of the next decade will be those who can solve the physical constraints of production.

If Selby can successfully move Etched’s production to Arizona, he will have proven that geography is the ultimate competitive advantage. The next test is the $300 million fund. If he raises it, the pressure to deliver will be immense. He is ready.