Interesting crossover into the capex-heavy world. Coming from a renewables background a lot of this is familiar.
As you've called out, where a lot of startups die is the FOAK stage.
Have seen difficulty funding development capital at the corporate level.
Have seen hesitancy for project capital (equity or debt) for projects that nobody but the startup can operate. At that point, the risk/reward is not the same as normal project capital for "standardized" assets.
Okay, this was a fun and very interesting thesis. Having retired from a business that was primarily a service platform (not 100% SaaS, but close), with multiple rounds of financing and evaluation, and shareholder entrances and exits, before IPO, it was very interesting to read about the different ways to look at these shareholder impacts.
Potentially, yes. The installations wouldn't be but the subscription revenue beyond that would. Theoretically they are more able to do ABS than Cisco because they have recurring revenue from the hardware.
Interesting take on why capital intensity shouldn’t scare off great hardware engineers pushing the envelope —it should attract the right ones and adjusting how venture capital is formed around these companies is the key. In aerospace and defense, it’s not just about building the hardware—it’s about ensuring that infrastructure and software scale alongside it. Many aerospace startups are gaining traction in this area giving high-capex teams the visibility and velocity they need to operate like software companies as well, even when building physical systems. Capital-intensive doesn’t have to mean they are slow to innovate.
Really thoughtful piece. Music to my ears as a capital-intensive founder on team atoms-AND-bits.
One thing I’m struggling to reconcile: the chart shows SpaceX raised $15M on a $27M post in Series A (over 55% dilution), and Series B added another 33%. That alone suggests >70% dilution (and all other rounds even excluding A are >60%), yet the article says the company “has experienced less than 50% dilution.” If dilution was offset by Musk / insider reinvestment in pro rata, that’s fascinating — just think it’s worth making that explicit.
Interesting crossover into the capex-heavy world. Coming from a renewables background a lot of this is familiar.
As you've called out, where a lot of startups die is the FOAK stage.
Have seen difficulty funding development capital at the corporate level.
Have seen hesitancy for project capital (equity or debt) for projects that nobody but the startup can operate. At that point, the risk/reward is not the same as normal project capital for "standardized" assets.
Okay, this was a fun and very interesting thesis. Having retired from a business that was primarily a service platform (not 100% SaaS, but close), with multiple rounds of financing and evaluation, and shareholder entrances and exits, before IPO, it was very interesting to read about the different ways to look at these shareholder impacts.
Thanks Greg!
One of my favorites
Capital deployment is going to change, dramatically.
So insightful, thank you.
Hypothetically, would a company with a model such as Meter benefit from ABS, or would their installations not be considered predictable cash flow?
Potentially, yes. The installations wouldn't be but the subscription revenue beyond that would. Theoretically they are more able to do ABS than Cisco because they have recurring revenue from the hardware.
Interesting take on why capital intensity shouldn’t scare off great hardware engineers pushing the envelope —it should attract the right ones and adjusting how venture capital is formed around these companies is the key. In aerospace and defense, it’s not just about building the hardware—it’s about ensuring that infrastructure and software scale alongside it. Many aerospace startups are gaining traction in this area giving high-capex teams the visibility and velocity they need to operate like software companies as well, even when building physical systems. Capital-intensive doesn’t have to mean they are slow to innovate.
Really thoughtful piece. Music to my ears as a capital-intensive founder on team atoms-AND-bits.
One thing I’m struggling to reconcile: the chart shows SpaceX raised $15M on a $27M post in Series A (over 55% dilution), and Series B added another 33%. That alone suggests >70% dilution (and all other rounds even excluding A are >60%), yet the article says the company “has experienced less than 50% dilution.” If dilution was offset by Musk / insider reinvestment in pro rata, that’s fascinating — just think it’s worth making that explicit.