The Shift Toward Hard Tech

For years, the venture capital playbook was written in software: low overhead, rapid scaling, and high margins. That era is hitting a wall. On June 18, at The Aerospace Corporation Campus in El Segundo, the industry’s focus will shift toward the physical world, as StrictlyVC Los Angeles convenes to address the surge in defense technology and robotics.

The event marks a departure from the typical SaaS-heavy conference circuit. With speakers like Mach Industries founder Ethan Thornton and Founders Fund’s Delian Asparouhov, the agenda reflects a growing consensus among investors: the most significant opportunities in the next decade will likely be found in atoms, not just bits.

Defense Tech Moves from Niche to Mainstream

Ethan Thornton’s session, “Built for a New Era of Defense Technology,” highlights the rapid maturation of the defense sector. Once considered a graveyard for venture capital due to long sales cycles and regulatory hurdles, defense tech is now seeing a influx of capital driven by geopolitical instability and advancements in autonomous systems.

Thornton, who has been vocal about the need for speed in manufacturing and national security, represents a new breed of founder. These entrepreneurs are not just building software for the Pentagon; they are building hardware that requires deep integration with manufacturing supply chains. The challenge for these companies is no longer just proving the technology works—it is proving they can scale production to meet national security demands.

The Rise of Physical AI

Beyond defense, the conversation will pivot to the intersection of robotics and artificial intelligence. Delian Asparouhov and Shinkei Systems’ Saif Khawaja are set to discuss “physical AI”—the application of machine learning to robotics and automation in the real world.

This is where the promise of AI meets the friction of reality. While large language models have dominated the headlines, the next frontier involves AI that can navigate, manipulate, and transform physical environments. For investors, this creates a complex valuation challenge: how do you price a company that requires the capital intensity of a hardware manufacturer but the R&D velocity of an AI lab?

Navigating the Hype Cycle

Carter Reum, co-founder of M13, will address the elephant in the room: the AI hype cycle. As venture capital firms look to deploy record amounts of dry powder, the distinction between companies with long-term durability and those riding the current AI wave is becoming increasingly blurred.

Reum’s session, “Finding the Next Big Thing,” is expected to focus on how investors are filtering out short-term noise. The goal is to identify businesses that solve fundamental industry problems rather than those that simply wrap an existing API in a new interface.

Key Takeaways

  • Defense is a priority: The shift toward national security and autonomous hardware is no longer a fringe interest for VCs; it is a core pillar of modern investment strategy.
  • Physical AI is the next frontier: Investors are moving beyond software-only models to back companies that integrate AI into robotics and physical automation.
  • Durability over hype: As the AI market matures, the focus is shifting from rapid adoption to identifying companies with sustainable, long-term business models.

What This Means for Founders

The message for founders is clear: the bar for capital is rising. Investors are increasingly skeptical of "AI-enabled" pitches that lack a defensible moat or a clear path to physical-world utility. For those building in the defense or robotics space, the next six months will be defined by their ability to demonstrate tangible production milestones rather than just prototype performance. The window to secure funding based on vision alone is closing; the era of proving operational scale has begun.