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Hardware Surges: VCs Bet Big on Physical Tech
16 Sep
Summary
- Venture capital is shifting $90 billion into deep tech since 2023.
- Matter Venture Partners raised $450 million for its second fund.
- AI lowers R&D costs, making hardware more defensible than software.
Artificial intelligence is reshaping venture capital, with a significant shift towards investing in hardware. Once cautious due to high upfront costs, investors are now injecting substantial capital into physical technologies such as semiconductors, AI infrastructure, energy, robotics, advanced manufacturing, and quantum computing.
This trend is exemplified by Matter Venture Partners, which announced raising $450 million for its second venture fund. The firm, founded by hardware investor Wen Hsieh, focuses on early-stage hard-tech companies. This pivot is also evident with major firms like Andreessen Horowitz increasing their focus on physical tech.
The rise of AI has lowered research and development expenses and made software products less defensible, further encouraging hardware investments. Companies like ASML and successful acquisitions such as Q.ai by Apple underscore the growing viability and appeal of the hard-tech sector. This marks a renewed interest after previous cycles in clean tech and hardware in the 2000s and early 2020s.
