E281:The Tsunami of Pain Facing Venture Capital

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Jan 13, 2026

Trey Ward, Founder of Rook, dives deep into the challenges facing venture-backed technology companies, especially in hard-tech. He highlights the significant differences in revenue growth between software and hardware. Trey also discusses the notorious "Death Valley" that many startups face, where funding runs dry before profits emerge. He emphasizes the importance of distinguishing between failed companies and those with unrealized potential and shares insights on how profitability can provide a lifeline for founders amid declining venture funding.

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ANECDOTE

Conviction Behind A Concentrated Bet

Trey invested his Etherius earn‑out heavily in Tesla because he saw a generational entrepreneur and a broader vision.
He bought in when the market was skeptical and Tesla announced the Gigafactory as a turning point.

INSIGHT

Different Revenue Curves For HW vs SW

Hardware and software have similar capital intensity, but vastly different revenue-speed and shapes.
Software ramps fast with smooth global distribution while hardware shows long delays and stepwise revenue jumps.

INSIGHT

The Predictable Death Valley For Hard Tech

Hard‑tech startups commonly hit a multi‑year "Death Valley" with long R&D and no revenue.
They face a sink‑or‑swim funding inflection where lack of B rounds often means shutdown.

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Why do some venture-backed companies struggle to survive despite strong technology and teams? In this episode, David Weisburd speaks with Trey Ward about the structural differences between software and hard-tech businesses, the predictable “Death Valley” many startups face, and what recent data suggests about the future of venture funding. Trey shares how capital intensity is often misunderstood, why graduation rates are declining, and how profitability can create a path forward when fundraising stalls.

Highlights:

Why strong conviction matters most when the market disagrees
How hardware and software revenue curves fundamentally differ
The misconception around capital intensity in deep-tech businesses
What “Death Valley” looks like for hard-tech startups
How investors distinguish failed companies from those with unmet potential
Data showing declining Series A–to–Series B graduation rates
Why a post-2022 venture funding hangover is accelerating failures
Acquiring venture-backed assets at a fraction of historical R&D spend
Using profitability as a strategy to give founders more time

Guest Bio:

Trey Ward is the Founder of Rook, an investment firm focused on acquiring venture-backed technology companies that have strong fundamentals but lack access to continued venture funding. He has spent his career investing in and operating across hardware, software, and deep-tech businesses, with a focus on capital discipline, long-term value creation, and paths to profitability outside the traditional venture model.

Our Podcast now receives more than 300,000 downloads a month. Are you interested in sponsoring an episode? Please email David Weisburd at david@weisburdcapital.com.

Stay Connected with David Weisburd:

X/Twitter: @dweisburd LinkedIn: https://www.linkedin.com/in/dweisburd/ Weisburd Capital: https://www.weisburdcapital.com/

Stay Connected with Trey Ward:

LinkedIn:linkedin.com/in/thomasvwardiii

Questions or topics you want us to discuss on How I Invest? Email us at david@weisburdcapital.com.

Disclaimer:

This podcast is for informational purposes only and does not constitute investment, financial, legal, or tax advice. Nothing in this episode should be interpreted as an offer to buy or sell any securities or to participate in any investment strategy. All opinions expressed by the host and guests are their own and do not represent the views of Weisburd Capital. Participants may hold positions or have financial interests in the companies, funds, or investments discussed. Any references to specific investments are for illustrative purposes only. Investing involves risk, including the potential loss of capital. Past performance is not indicative of future results, and any forward-looking statements are subject to risks and uncertainties. Any third-party data or opinions have not been independently verified. Listeners should conduct their own research and consult their own advisors before making any investment decisions.

(0:00) Introduction (4:04) Challenges and differentiators for hard tech startups (7:46) Venture capital downturn and strategies for struggling assets (14:07) Investment structures and management retention in acquisitions (16:17) Closing remarks