Also Capital closes $50M Fund II backing hard tech founders who 'play to win' from day zero

your backlog with your personal AI engineering team. Come on to the TV pan Ultra Dome. Mike, good to meet you. How you doing? While he's sitting down, let me tell you about Vibe.co. We're DTOC brands, B2B startups, and AI companies advertise on streaming TV, pick channels, target audiences, and measure sales just like you.

What's going on?

How you doing?

What's up, gentlemen?

What's up? Uh, please introduce yourself. First time on the show.

Sure. First time on the show. Happy to be here. Long time watcher. Thank you. Thank you. Um we actually talking earlier saying, "How long have you been watching the show?" And you're like, "Back to the hotel room." I was like, "I can't remember the hotel room, but I remember the printed tweets."

Oh, yeah.

We have a lot of paper today. We always stack up a ton of papers on Monday because we get the weekend edition and the Monday edition. And then we print some other stuff. We got to bring back the printed tweet for like the best tweet of the day. But honestly, the printer was like a major rate block rate limiter for us. Like cuz we would be like we're going live and and we used to just like start the show around 11. We'd be like h we're 30 minutes late, you know, cuz we would just do RSS. Now that we're live at 11, it's like the printer's got to work and we would print like hundreds of pages. Yeah.

We'd be printing whole articles. Anyway, sorry I introduc I I interrupted your

No, no worries. Uh so Mike Nuniata, founder and managing partner at Also Capital and we're early stage hardc fund

investing in Inception Preed seed. Yeah. Um,

how'd you get into VC?

How did I get into VC? Uh, had a bit of an interesting path. A little bit nontraditional. So,

Stanford.

Stanford. Yeah. Stanford.

Did you actually go to Stanford?

Uh, no.

Okay. No. I started at Harker and then No, I was good.

Okay. There you go.

Um, no, no, no. Uh, so I' I've been doing venture for a little bit more than a decade, but actually

overnight success.

Overnight success. Um,

so a little bit more than a decade. Uh started my went to Cornell for undergrad which you know

still Ivy League.

Still Ivy League. You got it.

You're right.

Exactly. Have you ever heard of it though?

I have. Exactly.

Um yeah, Cornell undergrad. Uh did the family office thing for a few years. Actually worked at the Cornell Endowment. So I've been an LP. So been on that side of the table. Uh and then business school and then started a a hard techch company back in 2016.

Okay. Okay. So founder. Yeah.

Founder. Yeah. You know, same same year Andreel started. Um we're worth a fraction less than 6 billion right now. But you know

what were you doing?

Uh we were doing food technology development. So

Okay. Oh, cool.

Around the same time you're doing Soilent John. So I'm sure we're doing food manufacturing technology um kind of from scratch. Meet a co-founder in a lab through series B company's still going. Built out a big facility. So I've been doing manufacturing uh for quite a quite a bit. Um

give us the history of also then.

History of also. So, uh, you know, it's funny. Also started as Will Brewy, Mike Enziata, and Colin Smith's backyard angel investing adventure in 2019. Um, so the show on Friday.

Yeah, he was on the show on Friday. I saw it. Um, so I did dorm room fund when I was in business school. So I've been a DRF partner for for a number of years now. An alum started writing angel checks in 2019. Kind of scaled up through SPVS and then raised our first fund in 2023. So that was a $22 million fund. And through that journey, you know, we wrote the first check into Radiant Nuclear, you know, VA followed shortly after that and I've been on the the board of V since we did K2 at Seed as well. Uh, any signal and software radios. We raised our first fund in in 23 that I mentioned and then wrote the first check into Northwood. So, there's been a bunch of

Was that post ZERP ending the the crash?

Yeah. Yeah. So, it was post Zerp, you know, kind of hard time to raise a fund wine as a as a new manager.

But you're not saying I'm just going to go into crypto and like the fl the the the frothy stuff. You're in the stuff that's on the next boom.

Correct. Well, you know, I think you Well, we should talk a lot more about this, but I think, you know, our thing from the beginning is, you know, who are your smartest friends and how do you believe in them before others do and then I think the hard tick thing candidly grew outside of that. It grew from that. when uh how many checks had you written into Gundo companies or Gundo adjacent companies before John went Oh yeah put it on the map with that video a small part in that

yeah I I don't know we did like six or seven before the Gundo bus and and your thing so the free bus and bus yeah the bus is really the defining line

exactly you know BC freez uh

yes I mean we did a bunch of we did VTA radiant K2 any signal um you know that kind crew of of folks and then since then did Northwood uh first check there. We you guys had Mesh on the show. We did that one recently as well. So

basically every

every company.

Yeah. So um we've been very fortunate they let like the non-engineer guy somehow cosplay as an engineer VC which is a lot of fun sometimes. Um but I'm not afraid to make myself look silly every once in a while to try to learn something new. So

how what is your you you uh you're so you're non-technical but so what is your process for underwriting some of these companies where at preede they can often actually seem like a science project and and that's like the uh I've probably made that mistake once or twice across 60some bets where I invest you know I'm not a a professional investor but accidentally invest in a science project that uh was being positioned as like a commercial opportunity but the ones you listed off, you know, started as kind of like far out ideas and now have very real commercial opportunities.

Yeah. Look, I think the the unique lens that I kind of bring to this is the fact that I ran a company doing hard tech stuff for seven years across you know engineering built the whole team kind of know what a good engineer sounds like and how they execute uh you know product go to market operations all that vertically integrated. We for the most part are investing in people that have done these kinds of things before. And if you look by example, you know, the Varta team, a lot of those guys are doing Dragon at SpaceX, right? They miniaturaturized it and turned it into Winnebago. If you look at the mesh optical team, they're doing lasers at SpaceX. They're doing lasers now. If you look at any signal, right, doing radios, a lot of the Northwood team, you know, doing ground stations, right? They're doing the thing they were doing before, but with a different market opportunity. So the common thread is like these are serious people building serious companies. And that's you can kind of see that once you've lived it um for seven years is you know I didn't um you know it's great that more people are coming in wanting to be excited about investing in this category putting more capital to work in the category. I think we need that. Yeah. Exactly.

I'm really excited about the broader Silicon Valley community coming in and marking me up five times 10 times.

I got an uncapped note for you if you're if you're really excited about one of these things.

U it it was in the cover of the Wall Street Journal business and finance section today. investors go heavy on AI immune assets. Explain to us what Halo is, what it stands for, what it means.

Yes. Uh so heavy assets, low obsolescence, uh which is a term that I just learned.

Yes.

A week or so ago. Uh so thank you JP Morgan. Yes. Are they a sponsor yet?

Not yet.

Do we want them to be?

Depends on what the product is.

We love JPM.

We love JP Morgan. Um yeah I think you this heavy assets low obsolescence is you know these things that are very difficult to replicate you you build a chemical plant or you build an aerospace production capacity these kinds of things are much more resilient than your traditional B2B SAS product that may be able to be replicated by cloud code for example or openclaw something like that

this was Delian's uh bit when we had him on for the slop versus steel debate group Randle uh debating of of you know what would be yeah it a pay-per-view uh what would be most resilient but uh unpack that a little bit because uh heavy assets high assets uh what does that actually mean in the defense tech context because there still is a lot of R&D that's happening and then low obsolescence I want to know more about like the curve of like what can be obsoles because there are some companies when I think about like

you know a lot of people have been saying like oh like buy raw materials like go long gold and it's like that is fungeable. So it's there's no real moat there. If you just own some gold, you just it's a commodity. So how do you think about non-commodity non-commodity?

Um so so two things. First uh look any great venture business at the core is some is a company that has the potential to generate high return on capital in the long term.

Y

like you have to account for the assets that it takes to generate the revenue and then how durable is the revenue over the long term.

Yep. Um that can come from Dowo Chemical which has just such massive scale that it's very difficult to replicate that scale and they have a very durable business low obsolescence. So you're not going to remake all those chemical plants

or it could come from something like a radiant nuclear who is building very complex uh nuclear reactors in a shipping container equivalent and they're going to scale up not just the design of that but the manufacturing, the supply chain, the regulatory and that gets to the second piece that we always talk about which is we love companies that are novel in the aggregate,

right? We're not looking to to your point on how do you underwrite a science or engineering journey. It's like it's not one specific thing we're trying to understand. It's what are the 32 things that have to come together. Why is this the right moment right now for this thing to happen? And if it does now all of a sudden we've got a mo because it's it's not impossible for somebody else to get a re-entry capsule like a Varta. Yeah. Right. It's not impossible for somebody to build ground stations like a Northwood. But the dynamism of these companies is in the ability to execute and move with speed and integrate these complex systems that become low absolescence but they are heavy assets.

Yeah. It's like the factory is the product. I've always heard that thrown around as like and I always read it as like the real challenge is manufacturing at scale but I I think there's another cut on the factory is the product which is probably something like like you actually would be very reticent to invest in a hard tech company like Varta if they were like yeah we have a third party manufacturer that produces the capsules we just send them a CAD file. Yeah, I think it really depends, right? Like I I I love the I love the theory behind the factory is the product, but I also think there's some pretty strong, you know, strategy that that needs to be built on. You know, why should we build a factory? And if you look, SpaceX is a good canonical example of this. Why should they build a factory? Well, because they were creating a lot of the demand at the same time as they were trying to deliver it at a given unit price to unlock a bigger economic opportunity. And there was no third party even available. Yep.

That they so they had to do it themselves or they couldn't meet a spec. So they had to do it themselves. And I think that's the different dynamic where you should not and I post about this a lot because it like

definitely is a thing I believe pretty strongly. You should not vertically integrate just for vertical integration sake.

Yeah. No,

it's a poor use of capital to take a bunch of equity and shove it into a commodity machine which you could not do for example. Um but if you look at like a Varta for example, cadence is everything for that business. So if cadence is everything, you got to be able to turn fast. So they have a lot of capabilities they built inhouse to be able to do that. Same kind of thing with the Northwood, right? Inhouse as much as they possibly can because they have to turn fast to move with speed. Speed's really the advantage, but it is built on a foundation of the ability to deliver at rate. Yeah.

And that's kind of the core when you say factories the product. I think I agree with that. But where are you pointing that advantage? Where are you pointing that? Because it is an investment that you're making as a company. Uh and it's something that even in day zero investments like all of our stuff is pretty much inception preede. We're thinking like if you're going to build a factory in three years, you need to be thinking about it now. Yeah. So why are you building that factory? Why are you doing that? Like what competitive advantage does it give you? Uh and I think that's how you know the people that we backed have really had a good sound like head on their shoulders of how to think about those trade-offs, those build decisions.

Uh how did you react to the general intelligence crisis of 2028, the the viral essay that nuked the markets? I saw this guy John Lober had a had a pretty uh kind of a response to it, breaking it down. Uh he was in some part saying like institutions have a lot of momentum. They can carry that momentum and adapt to uh these new market forces. He also suggested that uh re-industrialization could uh it it seems obvious that uh if a lot of our jobs can be just automated with a computer, maybe they weren't that real in the first place. But there's a lot of work that needs to be done in the physical world. There's uh America needs to uh figure out how to make stuff again, not just kind of push paper around. Uh, and so are you optimistic that this could shift talent from, you know, uh, making the the 50th like vertical CRM to making stuff? Do you think this could be a

Look, like I I I'll say this. I don't think we need to send our boys back to the coal mines.

Your children, they yearn for the mines. The

children the children. No, I'm just kidding. uh you know my kids if you're watching which I think you are get off my get off my

it's light blue collar. Yeah, it's well I think it's you know what are we doing next right? So if you go back to horse and carriage right it's hey Ford has a job for you on the production line like go learn how to do that right and I think the opportunity is in the companies that develop uh recurring education rework as you uh processes or or capabilities as part of their normal operating cadence. Right? So a lot of our best companies they will get seed funded and they will immediately start an internship program

and that internship program will become a funnel for new talent to come in after they graduate

for example and I think institutionalizing that around these companies that are moving fast in new in new areas whether it's lasers or nuclear or space right I think we could bring back that retraining but inside the corporate entity totally as it's the responsibility of the corporation is is really our company's problem that there's a talent shortage we should take that

about this he he had someone who was working basically a blueco collar job and just wanted to get like a fork for forklift certification and he brought him on and then pretty quickly he was like

writing uh CAM uh CAD automation software computer AED manufacturing um and like sort of became a CAM programmer like almost and that was like a lot longer path a long time ago and so the upskilling thing is definitely real at these companies. Look, I think the the we could get into like this whole different thing around like the student debt crisis is definitely a big bottleneck to people being able to do this upskilling. Oh, sure. Where they may be constrained financially that they just have to kind of

keep keep working to be able to make their student debt payments, for example. So, I think that's a big thing that people

Yeah. I was I was uh I was having a conversation with Tyler. We've we've had a a a number of of interns, all of which have been uh always paid, but I was thinking if I didn't have the opportunity to just work for free for people in college, where at the time I was like working a job at a hotel, like grinding, but then in my free time, I didn't have a lot of skills and so I would just tell entrepreneurs like, "Hey, let me just pick up little things to do." And ultimately learned a number of things that allowed me to

start my first business and all that stuff. And going back, it it feels like the uh the the sort of like unpaid intern is like completely like nogo now. Like it's a ne it's a negative signal if a company's doing it.

Uh but it might have to come back and it actually if uh if people really want it, it's like yeah, you can work a job that is very low skill so that and then spend all the rest of your time like reskilling yourself. So

I don't I think it might have to might have to come back. Although I'm sure the there's a million reasons why somebody would hate that idea.

Yeah. Look, I think it's just really important. So, one of the things that's most inspiring to me about this moment in time is it feels like not only are there people spinning off of like the SpaceX of the world that are now continued to take on really big challenges.

They're doing two things. They're doing things that are really meaningful that when you get at the root of them and there's an authentic drive behind a lot of what they're doing,

but they're also willing to tell the stories that inspire other people to be better. If you look at Jared Isaacman coming in as NASA administrator, like he is an inspiring human being,

right? That I think we we need more people like a Jared who's 30, 40 years old, whatever it is, like young person future. He's been to space process payments. Every time I get a shift shift payment checkout, I just go.

Yes.

Um, talk about debt.

What is a reasonable debt load for a series A hard tech company? Yeah. In software, venture debt is seen as cancer. Like, you do not want to go near it with a 10-ft pole. Paul Graham said it blows up companies left and right. Yeah,

it's very scary. I think a lot of entrepreneurs over time, they get comfortable. They learn how to use it effectively, but then it's always just like, well, I have this money sloshing around anyway. It's all one big pool. Like, it's not like the dollars get allocated one place or another.

How are you talking to founders in your portfolio about debt?

Yeah. Uh, like I could get hyper techchnical about this, but I won't for this audience. Um,

no, get technical.

Get technical. Get hyper technical. Uh the right amount of debt at series A is zero.

Okay.

Uh the the right way to use debt in companies is in in two places.

Says the guy who sells equity.

Says the guy who sells equity.

He's like

no one should ever raise. Just come to me for another check. I'm not messing with you.

Uh at the right time in the right place. It makes a lot of sense. There's really uh

when does it make sense? When does it start to You could take me out to series D. I don't care. But where? Because there are a lot of companies that we've talked to where it's hard tech and they wind up buying a ton of machines in a big warehouse and it just feels like the liability side of the business is very different than a couple programmers in a bedroom or in a garage. Right.

Yeah. Um so you know in a past life when I mentioned I worked at the the Cornell Endowment. I also got my CFA while I was there and then went and got my MBA. So traditional

Yeah. Such a nontraditional wind up in finance with just a CFA and an MBA.

Yeah. Um but uh you know revenge of the balance sheets is kind of what I how I think about what we're investing in now. Um but look I think you're using debt for a couple situations. Number one uh to buy long live assets.

Y

but the caveat is they need to be tied to actual contracts. Okay.

That will be pushing out real revenue and cash flow. Yeah. If you are buying if you are using debt in to speculatively invest invest in capacity you are taking a lot of existential risk risk into the business until you have contracted revenue that has significant bookings and backlog. Right? So, if you've got two years of backlog and you want to take on, you know, an interest rate of 7% while your equity is 30%, and you think you can get to a revenue milestone that blows out your equity multiple,

that's actually a really good use, right? Or if you have, uh, you know, there's a canonical example I always think of when I was working at the endowment, um, we looked at a venture debt fund,

and it was super interesting, like 2015, this was 2015, and they had a very good use case of using venture debt. Uh and it was they were lending to Pandora

and P so for sure Pandora.

Cheers to Pandora. Uh so they were

service not the pickup place.

Yeah. Yes. Exactly. Not the jeweler. The streaming service. Um

they were lending to Pandora and Pandora basically had like a cash flow timing issue where they needed to buy servers to be able to store the music and stream it

and there would be revenue that would come off of the stream. So the revenue would lag the cash investments in the servers. But as they were growing streams, their multiple on the the revenue was growing.

Oh, interesting.

So you actually could use the venture debt to bridge to a higher revenue multiple when you went to raise more equity and reduce the cost of equity. So even if you were paying 18% implied cost of equity IRRa on the venture debt, including the warrants, it was still cheaper because the cost of equity was declining as you hit milestones. So, it was episodic use where you knew you could raise equity as you hit a specific milestone to pay it down

or it was part of the permanent capital structure that was tied specifically to cash flow. The trap is when you use debt to try to extend runway.

Yep. as a crutch for not being

so even in that Pandora example like it it maybe it's not an asset back loan but it's like almost asset back because you are just taking the money and buying assets correct that probably have some resale values

and you know the revenue is going to come because you know streams are going to go up and then you'll be able to refinance it cuz equity investors say you know you're at 10 million streams I need you to be at 15 million streams and like how do you get there well at the time like this was one way you could get there and buy the physical asset so I think understanding where the slope

change of your multiple effectively

like those inflection points um or permanent capital.

That's very cool. Jordan, anything else?

Uh no, what what founders in in what categories do you want to meet?

What founders and what categories?

Like what kinds of founders? Not specific.

Uh what kinds of founders? Good question. Uh look, our big thing is founders that have fun.

Have fun, but they play to win.

Okay.

Uh we talk about that a lot. Like have fun, play to win. There's like plenty of research and if you're having fun, that's when you do your best work.

You see that with the Vera team all the time.

See the V team all the time.

The thing Winnebago is like a funny like clearly they're having a good time. They did the LK99 thing and like

totally midnight side project. Very fun.

Totally. Yeah. It's like are you building these little cultural things that people have a good time? Um I think that's really really important but also the playing to win side too because I think you can overindex on let's have too much fun and realize like hey you're competing out here. So that's really what we're looking for is you you know it like you guys have a ton of fun here, right? Like I think this cultural vibe is definitely what we look for in founders is are they having fun? It's how you kind of get through hard stuff. So we're

let's put the hard tech to work. Tell us about

Why don't you hit the gong?

Yeah, you hit the gong.

We need to hit the gong. All right.

And tell us the announcement at 50 million.

All right. Our second fund 50 million capital.

Go smash that gong. authority. Great.

Thank you so much for coming on down to the TBP Ultra.

This is great. Have a good rest of your day and we will talk to you soon. And lastly, but not least, I will tell you about Phantom Cash. Fund your wallet without exchanges or middlemen and spend with the Phantom Card. Mike really backed at least 50% of the breakout hard