Bad advice: don't build startups that touch the real world.
Look, hardware is hard. Biotech is hard. Energy startups are hard!
There's a reason why "choose bits, not atoms" is a standard line across many VCs who shun physical startups in favor of software ones.
But the tide does seem to be shifting, ever so slowly.
Chart below breaks out capital invested into Carta startups by year. in 2016/2017, software startups took in about 80% of all capital.
In 2025, the share going to software was down to 64%.
𝗪𝗵𝗮𝘁'𝘀 𝗛𝗮𝗽𝗽𝗲𝗻𝗶𝗻𝗴 & 𝗪𝗵𝘆
There has been a resurgence of interest into deep tech categories lately. Maybe some of that is narrative (American Dynamism, defense+aerospace, etc). Maybe some of that is the idea that moats in software are declining in the age of AI.
There has been an increase in the number of companies attempting to pull of software + hardware models.
Hardware itself (especially robotics) is experiencing a real boom.
The number of VC funds has grown immensely and the need to specialize / differentiate as an investor has never been greater.
Certain deep tech categories like Hardware have pulled ahead of Biotech, which was the old stalwart in the deep tech space. But there are still laggards (Med Device + Energy probably deserve more attention than they receive).
Regulatory concerns play a bigger role in many deep tech sectors than in pure software, but interaction with the government on state and federal levels is getting fractionally easier over time.
Respect to the founders building in the real world!
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