The Industrial Slope: Why Deep/Hard Tech and Infrastructure Need Permanent Capital Most

Aki Kakko
10 hours ago
3 min read

A common critique of systematic, programmatic funding is that it is a "SaaS-only" strategy. The logic goes: "You can track the 'Slope' of an app or a shipping platform because the data is digital. But you can't automate the funding of a fusion reactor, a biotech lab, or a semiconductor factory." This is a failure of imagination. In reality, capital-intensive sectors are where the traditional 10-year venture fund does the most damage—and where the Continuous Capital model offers the most dramatic advantage.

The "Deep/Hard Tech" Liquidity Trap

In software, a 10-year fund is a nuisance. In "Deep/Hard Tech" (energy, manufacturing, biotech, space), it is a death sentence. Capital-intensive businesses often have R&D or construction cycles that span 7 to 15 years. Under a traditional VC model, the fund is forced to "exit" the company (via sale or a premature IPO) exactly when the pilot plant is finally working and the real compounding is about to begin. The VC "kills the compounding" of the most world-changing technologies simply because they need to close out Fund III.

Redefining the "Slope": From Revenue to Milestones

In The Programmable Term Sheet, we defined "Slope" as the second derivative of growth. In capital-intensive sectors, the Slope isn't just revenue—it is Technical De-risking. Instead of waiting for a quarterly board meeting to "pitch" for more money, the infrastructure of the future (VentureOS for Deep/Hard Tech) tracks technical telemetry:

Biotech: Real-time data from lab automation and clinical trial enrollment.
Manufacturing: Sensor data from a pilot production line showing yield improvements.
Energy: Performance data from a small-scale prototype exceeding efficiency thresholds.

When the "Slope" of technical success hits a pre-defined inflection point, the Programmatic Capital is released. There is no "Series B" roadshow; there is just a data-driven execution of the Master Venture Agreement.

The OpCo/PropCo Architecture

One of the most powerful tools for capital-intensive sectors is the separation of Technology (OpCo) and Assets (PropCo). Traditional VCs struggle with this because their funds are designed only for "high-beta" equity. They force founders to use expensive, dilutive VC dollars to buy concrete and steel. At Meritocratic.Capital, our plan for industrial-scale innovation uses a dual-engine approach:

The Technology Engine (OpCo): Funded by our Continuous Capital model, focusing on the high-growth R&D.
The Infrastructure Engine (PropCo): Utilizing our permanent balance sheet to provide lower-cost, asset-backed funding for the physical equipment.

By separating these, we prevent the "dilution to hell" that typically happens when a deep-tech founder has to raise a $100M Series C just to build a factory.

Continuous Capital as an Industrial Utility

If you are building a satellite constellation or a green hydrogen plant, you don't need a "Lump Sum" every two years; you need Continuous Flow. A traditional VC check is like a bucket of water in a desert—the founder spends half their time worrying about when the next bucket arrives. Meritocratic.Capital is a pipeline. By connecting capital deployment to the company’s internal milestones, we ensure the "Slope" is never interrupted by the friction of fundraising. The valuation is still algorithmic:

Valuation = (Technical Milestone Value) x (Acceleration Factor) x (Asset Floor)

We don't "guess" the value of a factory; we calculate it based on the verified performance data of the machines.

Permanent Capital for Permanent Infrastructure

The world's most critical problems—energy transition, sovereign manufacturing, drug discovery—cannot be solved in 10-year sprints. They require the Berkshire-style Holding Company structure we outlined in the liquidity inversion. By taking Meritocratic.Capital public, we provide the public markets with a way to invest in the "Industrial Inception" of the world. We can own a fusion company for 30 years without ever being forced to sell. We create liquidity for our shareholders via our stock price, while our industrial assets stay focused on the mission.

The New Industrial Revolution

The "Artisanal VC" model was built for the early days of the internet. It is too small, too slow, and too short-sighted for the massive physical challenges of the 21st century. The Meritocratic.Capital model is not only a "software play." It is an Infrastructure for Innovation. Whether it’s bits or atoms, the physics are the same: identify the Slope, remove the friction, and never stop compounding.