Choosing an Investor Is a Technical Decision

A note from Mike Schroepfer for founders building hardware, energy, and industrial systems. Early investors are not just sources of capital. They shape how quickly a company finds constraints, tests assumptions, and moves from breakthrough to deployment.

What Would Have to Be True?

The easiest way to sound smart is to explain why something won’t work. The reasons are always available. Too slow. Too hard. The market isn’t ready. This has been the dominant mode of discourse around building hardware and physical technology for a long time.

I call this stop energy.

Stop energy feels clever, and it’s hard to disprove in the moment. But it’s mostly unexplored assumptions delivered with confidence. In deep tech and hardware, the physics either works or it doesn’t. And once you’ve cleared that, most of what people call impossible is a supply chain that hasn’t been built yet, or a customer whose nice-to-have just became a must-have and nobody’s called them yet.

If you’re building in the physical economy, your early investors are not just sources of capital. They shape how quickly you find constraints and whether the assumptions that could kill the company get tested before they harden into architecture, hiring decisions, or a capital strategy built on something nobody actually confirmed.

That makes choosing an early investor a technical decision, not just a financing one.

Physical Companies Need Specific Expertise

More investors are now paying attention to hardware, energy, and industrial systems. 

That’s good. The physical economy needs more capital, more technical talent, and more serious builders. But interest and expertise are genuinely different things. Physical companies don’t behave like software companies with heavier capex. They have different failure modes. The consequential ones happen early, and they’re not always obvious until they’ve already cost you six months.

The hardest part of hardware isn’t proving a technology works in the lab. It’s the 10x after that. And the 10x after that. A lab result doesn’t always survive the first manufacturing run. A first customer takes eighteen months, not six. A technical decision becomes a financing constraint. A hiring gap becomes a commercialization problem. A supply chain assumption becomes the thing that slows deployment two years later. A seed-stage architecture choice can determine what’s possible at Series B.

Most companies don’t fail because the science is wrong. They fail before they ever get to the first customer, or during the scale-up that follows.

Risk Retires Through Discovery

Which pain point is urgent enough to matter tells you which technical risk to retire first. The customer you pursue shapes the capital strategy. Who you hire next changes what’s possible at the next milestone. How the company gets understood by the market determines who shows up at the next round. 

Talent, narrative, and technical direction aren’t separate tracks. In physical tech, they compound on each other, for better or worse, from very early on. This is why you need to get to the truth fast. Test assumptions before they calcify into architecture, into hiring decisions, into a capital strategy built on a customer need nobody actually confirmed. We had a founder put it this way: “We’re not ready for go-to-market. We’re ready for go-to-discovery.” It stuck because it’s right.

That means going to customers before the product is ready. Finding out who owns the budget. What adoption actually requires internally. What proof would make a new solution better than the status quo. And then getting those answers back fast enough to actually change what gets built, which is harder than it sounds.

The stop energy that kills companies at this stage isn’t always external or explicit. Sometimes it hides inside assumptions about procurement timelines, customer behavior, financing structures, or what the market will accept. The right early firm helps founders see which risks are real physics and which are untested assumptions. That requires going deep enough on the science to know what’s actually true, and staying close enough to the commercial work to know where the assumptions are hiding.

These skills have to exist in the same room at the same time.

Founders need partners who can separate real technical constraints from market assumptions before consensus forms. “Evaline took the science seriously and backed me while I was still in high school, before anyone else was paying attention,” said Hooman Nezhad, co-founder of Solcoa. Evaline Tsai describes it this way, “Founders building in this space are often doing something no one has done before. My job is to understand the science well enough to know what’s real and to be a partner in the decisions that don’t have a playbook.” 

Assessing Early Investors

The best partnerships often start early and show up in very practical ways.

Below are a few places where the right investor can help, and the kinds of questions founders can ask to understand how a firm thinks, where it has relevant experience, and whether its support matches what the company actually needs.

Recruiting critical hires. The first VP of Manufacturing, Head of Regulatory, or plant manager can change a company’s trajectory. Who has the firm helped recruit into key roles? Can you talk to a founder they helped?

Narrative strategy. Every conversation about your company shapes what the market believes you are building. In deep tech, that can determine whether people see a science project, a product, an infrastructure company, or a category-defining business. Can the firm help make that narrative intentional early?

Go-to-discovery.  Early teams are pressured to pitch, but the more valuable work is often listening first. Can the firm help you get in front of customers early to learn who owns the problem, what proof matters, and what a yes actually requires?

Landing first customers. Large customers — utilities, manufacturers, hyperscalers — buy on references, reliability, and risk, not product-market fit in the software sense. Have the firm’s introductions led to pilots, paid contracts, offtakes, or strategic partnerships? What did they do beyond making the intro?

Navigating scale-up. The transition from working prototype to running factory is where physical tech companies stall. Has anyone in the firm been through this? What broke, and what would they do differently?

Capital formation. Venture dollars alone rarely carry a physical company to scale. Can the firm help plan for follow-on financing, project finance, and non-dilutive capital? Do they have relationships to help finance capex before the company is obvious to later-stage investors or lenders?

Technical de-risking. When you have to choose between architectures, chemistries, or manufacturing approaches, can they evaluate the tradeoffs and implications with you?

Who Shows Up When Things Get Hard?

Most venture categories are narrow lanes. Investors who can only move in one direction will apply implicit or explicit stop energy to things outside it. Founders need partners who can move fluidly across the science, hardware and software, manufacturing, deployment, and organizational scale-up. All of it, from the physics to the financing to the first customer.

“Gigascale has been a hugely valuable partner to us,” said Baker Shogry, co-founder of Light. “Their deep experience in energy and tech, and their track record of scaling, means they understand where we’re coming from and get straight to what matters.”

To boil it down to a single question: who shows up when things get hard? 

Stop energy doesn’t build anything. The founders rebuilding the physical economy already know that. They deserve investors who can tell the difference between a real constraint and an assumption that hasn’t been tested yet, and who show up to help figure out which is which.

Read the thesis behind Gigascale Capital Fund I: Backing Founders Rebuilding the Physical Economy.