On the robotics and physical AI VC market Over the last few weeks and months, there’s been a lot of fear in the markets. We believe those concerns are overblown. Let me pose a question - were OpenAI, Anthropic, Cursor, Coreweave, etc good investments to make in 2021/2022? The answer here is pretty clear cut. Were there AI companies from that period that weren’t good investments? Sure, but that’s the nature of venture and a small allocation to the top winners could still more than compensate for many poor picks. Look at this chart. US investments in Robotics has still not even reached pre-ChatGPT levels of investment in AI. At the same time, frontier Physical AI models are already more capable than GPT3.5 at the time ChatGPT came out. Roughly half of Anthropic/OpenAIs revenue comes from software development related use. Software development makes up 2-3% of the global labor market. Robotics represents physical work which is roughly 50% of the global labor market. While I’m very bullish on AI for knowledge work over the next few years, I don’t have a prediction of what happens over the next few weeks and months. Agents have only just started to become really useful for most people and that growth has yet to be realized. Could a continued short term market correction in AI spill over into private Physical AI/robotics? Short term maybe some funding rounds for lower quality companies take longer or don’t get done - there are some pools of capital that cross over. For the companies that otherwise are destined to win, we don’t think there will be much impact. Winners are going to win. Fluctuations in latent demand for automated physical labor for one shouldn’t change much and if they do, matters little given how little existing penetration and superior economics that robotic solutions provide. While I don’t have a strong macro view and am definitely not this bearish, the strongest example could be to look at the Great Depression. Tractors were invented before this period but roughly a fifth of the growth in tractor-owning farms between 1920 and 1954 came during the 1930s. "The Dust Bowl could blacken the sky, but it could not make the horse cheaper than the tractor." Companies that face idiosyncratic circumstances will have idiosyncratic results. Technological advances here are accelerating, not slowing and if companies can grow like weeds then we expect funding to follow even if Anthropic raises at $1.3T instead of $2T in its IPO. Most investors have only started dabbling in this sector and there are mountains of capital looking to get proper exposure. The IPOs of SpaceX and Anthropic are historically large liquidity events that we expect to propel continued downstream VC funding for months and years. Let me clear - there will always be a period where the wheat is separated from the chaff. Picking matters. Some capital has gone into winners but also some capital that has gone into losers and we will see the divergence in outcomes over the next few years. But with the backdrop of agentic robotic breakthroughs, Multimodel models accelerating R&D for physical AI while also proving a new approach of code as policy, and massively scaled data collection, our optimism for the sector is unwavering