"Turpentine VC" | Venture Capital and Investing

E67: Defense Tech’s Rise with 8VC’s Alex Kolicich

Dec 3, 2024

Molly O'Shea chats with Alex Kolicich, founding partner at 8VC, known for his investments in Palantir and SpaceX. They dive into the rising trends in defense technology spurred by geopolitical factors. Alex discusses the evolving landscape for AI investments and the unique challenges of capturing value. He also highlights the shift towards innovative defense startups over traditional contractors, driven by new government practices and a favorable fundraising environment amid economic uncertainties.

58:51

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Episode guests

Alex Kolicich

Molly O'Shea

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Episode notes

Podcast summary created with Snipd AI

Quick takeaways

The current landscape of AI investments shows a mix of optimism and caution due to market instability affecting investor decisions.

There is a significant divergence between public and private market valuations for AI software companies, highlighting inflated private funding amid historical corrections in public markets.

Investment in defense technology is on the rise, with startups emerging as key players to innovate and meet evolving military needs overlooked by traditional contractors.

Deep dives

AI Investment Paradox

The discussion highlights the dualities present in the current landscape of AI investments. While there is significant optimism surrounding rapidly advancing AI capabilities, this optimism is met with caution due to market instability and accompanying uncertainties for investors. Investors are faced with the critical challenge of identifying which companies and business models will succeed in capturing value during this period of transition. As firms boast sky-high valuations often exceeding traditional revenue multiples, the pressure is on investors to research and differentiate truly viable businesses from those that are merely benefiting from the AI hype.

Intro

2min

Navigating AI Investment in Defense

11min

Navigating AI Fundraising Dynamics

5min

Navigating the AI Investment Landscape

12min

Navigating Today's Exit Landscape in Venture Capital

5min

Emerging Trends in Defense Tech Investment

22min

This week on Turpentine VC, we’re releasing Sourcery’s Molly O'Shea’s interview with Alex Kolicich, founding partner at 8VC to discuss Alex's H1 2024 report on the venture landscape, covering AI investment challenges, the resurgence of defense technology, and broader economic trends impacting markets. For full show notes, visit: https://highlightai.com/share/3f9d98f9-c3d6-42c9-b2cc-e6ba32c668e4

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LINKS:

8vc: https://www.8vc.com/

Alex’s Substack: https://www.alexkolicich.com/

Alex’s first appearance on Sourcery: https://www.sourcery.vc/p/exclusive-alex-kolicich-8vc-exodus

Alex’s latest H1 2024 report: https://www.sourcery.vc/p/alex-kolicich-8vc-ai-and-defense

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FOLLOW:

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TIMESTAMPS:

(00:00) Intro

(00:59) Meet Alex Kolicich

(01:50) Diving into the H1 2024 venture landscape report

(02:03) The AI investment paradox

(03:31) Challenges and opportunities in AI

(07:25) Public vs. private market dynamics

(08:24) The role of AI in software and market valuations

(12:32) Fundraising strategies in the AI era

(13:01) Sponsors: Carta | Oracle

(19:12) AI capabilities and the future of technology

(25:58) The Gartner hype cycle and AI's future

(28:08) AI market trends and valuations

(29:00) The exit environment and acquihires

(29:28) Challenges in IPOs and M&A

(32:03) Opportunities in secondaries

(32:52) Sponsor: Squad

(33:58) Defense wave: A new frontier

(43:52) Changes in defense procurement

(49:31) Advice for defense startups

(52:09) Reflections on AI and market surprises

(55:32) Wrap

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