Sequoia Capital and a coalition of top-tier venture firms have invested €500 million in Stark, a Berlin-based autonomous weapons systems company, bringing the startup's total funding to €640 million. The round signals a broader shift in venture capital away from software-only bets and toward hard infrastructure, manufacturing, and defense technology.

Why Are VCs Suddenly Betting Billions on Physical Infrastructure?

The investment in Stark reflects a fundamental realization among Silicon Valley's elite: as artificial intelligence makes software cheaper and easier to build, the real competitive advantage increasingly lies in the hardware, energy systems, and supply chains that power it all. Mike Schroepfer, the former Meta Chief Technology Officer who founded Gigascale Capital in 2023, explained this shift plainly.

"If AI is going to make software nearly free to write, then I think software businesses might be challenged, and the moat moves to the hardware. The game becomes: How do I get the infrastructure built to have a better AI?" said Schroepfer.

Mike Schroepfer, Founder of Gigascale Capital

Schroepfer's perspective carries weight. Before launching Gigascale, he spent years building the physical infrastructure that powers Meta's operations. He saw the same exponential cost curves in solar cells, batteries, and electrolyzers that he had witnessed during previous tech transitions, from the web to mobile computing. The convergence of surging AI demand, electrification, and energy constraints created what he calls a "once-in-a-generation opportunity" to rebuild the physical economy.

What Does Stark Actually Build?

Founded in 2024 by Uwe Horstmann, Stark develops autonomous weapons systems designed for rapid deployment and scalability. The company's product portfolio includes loitering munitions (one-way attack drones), unmanned surface vessels, and command-and-control software called Minerva, which coordinates multi-domain military operations.

The company operates production and research facilities across several European countries and focuses heavily on three technical areas: electronic warfare, autonomy, and mass production. With the fresh €500 million capital injection, Stark plans to significantly expand its research and development capabilities, particularly in electronic warfare, while also scaling manufacturing capacity to produce drones at much larger volumes.

How Are Top VCs Approaching Hard Tech Investments?

• Diversified Investor Base: Stark's funding round included Sequoia Capital, Founders Fund, the NATO Innovation Fund, Project A, Air Street Capital, 201 Ventures, Advent International, and Döpfner Capital, showing that hard tech now attracts both traditional venture firms and specialized defense-focused investors.
• Focus on Energy and Infrastructure: Gigascale Capital, which raised its first institutional fund of $250 million this month, invests across energy, advanced manufacturing, materials, robotics, and AI in the physical world, with energy representing the single largest investment area.
• Longer Development Timelines: Unlike software businesses, hardware companies require different planning, testing, and iteration approaches, with failure modes that are fundamentally different from code-based products.

Schroepfer emphasized that hardware investing is not simply "a software business with higher capital expenditure." The operational and technical challenges are categorically different. When he started Gigascale three years ago, many investors dismissed the idea, insisting that all the money was in software. That skepticism has evaporated as companies like Cerebras, Fervo Energy, SpaceX, Nvidia, and TSMC have achieved massive valuations by controlling critical physical infrastructure.

Schroepfer

What's Driving the Urgent Demand for Infrastructure?

The United States energy market illustrates the scale of the challenge. For the past 20 years, electricity demand remained relatively flat, growing close to zero percent annually. That has abruptly reversed. The country now faces growth of at least a few percent per year, driven by hundreds of gigawatts of data centers planned over the next five years alone, plus electric vehicle charging infrastructure and factory electrification.

This creates a massive supply-demand imbalance. Building power infrastructure takes years, not months. Permitting a gas power plant or constructing a power line requires lengthy regulatory processes. Meanwhile, every technology company wants computing capacity immediately, because infrastructure has become the competitive moat. Meta has even used tents instead of permanent buildings for server installations to accelerate deployment timelines.

The Stark investment exemplifies this broader trend. As AI demand explodes and geopolitical tensions reshape supply chains, venture capital is flowing toward companies that control the physical layer: energy, manufacturing, semiconductors, and defense systems. Sequoia's participation in Stark's round, alongside its other hard tech bets, signals that the venture industry's center of gravity is shifting from bits to atoms.