☕️ Too Close for Missiles, Switching to Guns (Hard Tech)

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Author

Morgan Barrett
January 28, 2025

Today’s Menu ☕️

👋 Hi, Breakfast Club Members!

Thank you Luka @ Remgu for sponsoring today’s edition. Luka helps growing companies source top European engineers

Last week in NYC was cold but both the AI/ML Engineering breakfast with Baseten and the Tech Breakfast Club with Max Altman crushed. I genuinely thought nobody would show up in 7 degree weather at 8am but boy was I wrong. Absolutely packed house both days.

Now I’m back in LA to cohost the El Segundo version of Tech Breakfast Club (tomorrow) with Jacques Sisteron from Upfront. I also forced Jacques to sit down for an exclusive interview where he talks about the future of Hard Tech in Southern California and how Upfront went from investing in companies like Ulta and PF Chang’s to backing the most sophisticated space companies in the world - an obvious pivot (scroll down).

Resources:
-Clerky offers a $100 discount for TBC Members on their formation packet. Reply to the newsletter and I’ll send you an invite
-Fixing the YC SAFE: Reply to the newsletter and I’ll send you a redline for the YC Postmoney SAFE that can save founders millions in dilution
-Ramp is offering a $500 bonus to TBC members when they start using Ramp.

Tech Breakfast Club Events

El Segundo Tech Breakfast Club Jan 29th
Join Jacques Sisteron (Upfront Ventures) if you’re building (or investing in) something real

Fintech Tech Breakfast Club (NYC) Feb 13th
Cohosting with Parker Odrich (Communitas Capital) and Topher Price (MS&AD). Come join if you’re building or investing in Fintech

AI/ML Engineering Leaders (NYC) Feb 14th
Cohosting with Baseten and celebrating some of the smartest AI/ML engineers and CTO’s in the city

SF Tech Breakfast Club March 13th
We’re back!

Tech Breakfast Club 🤝 Luka

Meet Luka, founder of Remgu, who sources top European talent for fast growing companies

#SponsoredPost

You studied CS at Waterloo – incredible CS program – then you worked at companies in Toronto, Chicago, and NYC for almost two decades... why did you move to Croatia?
I moved to Canada as a kid from Croatia but then I went back on vacation in 2017 and met my wife. So, I moved back to be with her. I started finding all of this incredible technical talent that spoke English very well – that’s what prompted me to start Remgu

Who is Remgu a good option for?
We’re ideal for startups and SMB’s seeking top-quality European talent for long term engagements. Our talent is elite – we’re very selective and do intensive vetting. So when a client comes to us, the process is very streamlined, we match them with one or two handpicked candidates. So for $50 to $80/hour you can get a vetted experienced senior engineer instead of settling for the most junior and inexperienced US based engineers.

Why is Remgu a better option than competitors?
We have near perfect retention of clients, and I think that comes from our long term perspective. We’re not here to maximize profit from every engagement. We want to grow with our clients. We have a lean and flexible model with low overhead, so clients keep coming back to us for more and more talent.

If you’re ready to build out your team, the easiest way to get in touch with Luka is connecting with him on LinkedIn

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Dominating Hard Tech with Jacques Sisteron

You might have seen the annual Hard Tech 50 List when it dropped last month. Twitter was on fire talking about who made the cut, who should have been on the list, and if any of these companies would ever see an exit. You should meet the VC behind the viral list - Jacques Sisteron.

Jacques Sisteron is already in the top 1% of VC’s by height, but it’s only a matter of time before he’s top 1% based on DPI.

I want to start off with the Hard Tech 50 list. I love it. It’s educational, it’s helpful for the ecosystem, it’s also brilliant marketing. People, every year, are hyped when it drops and sparks a lot of good discussions –
It was very clear to us that Southern California is the beating heart of hard tech – the defense tech and aerospace ecosystems. Everyone who invests in hard tech knows that. But that’s not well understood by VC’s generally or the rest of the country. So, we’re always tracking where the dollars are flowing and talking to entrepreneurs constantly. We wanted an easy, digestible way to show the tech world what was happening here and that it deserves your attention. 

Was it tough to get 50 great companies initially? 
When we finally put pen to paper there were more great companies than I even expected. There were no filler companies. It was the opposite, we had to make some painful sacrifices to hit 50 companies. 

And this year was even harder. We keep having to narrow the criteria – now we just feature companies that had a high-profile year. 

I see some repeats from last year – who made the cut both years?
SpaceX will never not make the list. Anduril is a safe bet too. And we owe a lot to both companies and what they’ve done for the talent in SoCal and the culture of excellence. Varda and Hadrian are super interesting. Apex was a repeat – we actually invested in them after they made the list last year. 

Then we have to shout out the Gundo guys. Cameron Schiller at Rangeview, casting metal parts – he’s also a core member or like a founding father of the new Gundo generation. Augustus at Rainmaker, too. 

You work a lot with Nick Kim at Upfront. Tell everyone what Nick has done these last couple of years
Mark Suster, managing partner of Upfront –

Mark is a legendary seed investor
Yeah, Mark is a shrewd guy. He was taking stock of the LA landscape. It’s always been, or at least for 100 years, the home of aerospace in America. All the primes are here. It’s the reason why Elon had to set up SpaceX in LA. Now SpaceX has lowered launched costs and thrown off all these brilliant engineers who are entrepreneurial. You add in some geopolitical tension and the government becoming nimbler with procurement and now hard tech is much more palatable to investors. 

So, Mark, right around the time he hired me and Nick Kim, wanted to push the fund in that direction. 

Over the history of the fund, because there wasn’t much entrepreneurial activity in aerospace, Upfront had focused on other areas.

Yeah, Upfront was very consumer focused at its start
I might get fact checked on this, but Upfront is basically the oldest fund in LA. LA didn’t really have a tech industry until recently. In the 90’s, Upfront was focused on retail businesses. One of the big early successes was Ulta Beauty. And PF Chang’s. But as retail went online, as ecommerce became a thing, Upfront moved with the times. Truecar went public. Bill Me Later was the original buy now, pay later companies. That was acquired by PayPal. We were early to Ring, the video doorbell company. 

The fund has stayed in the DTC world, too. Parachute was a big winner.
We also did Nanit – anyone who has kids will recognize that as the smart baby monitor. 

Okay, back to you and Nick
Nick is great. We’re a great team. He grew up here as well, in Santa Monica. He was at Crosscut, another Santa Monica based fund. Crosscut had invested in Umbra, a Santa Barbara based Earth Observation company using synthetic aperture radar to take images of the Earth from orbit. So Nick had done work with that company. And Nick’s mom was an aerospace industry lifer.

When we got started looking at these areas... we started more from the aerospace standpoint. We quickly realized that our thesis naturally expanded to a bunch of other verticals. You can go upstream to manufacturing. You can look at defense. Also energy and critical infrastructure. We’ve dabbled in semiconductors as well. 

Tell me about some of the deals you’ve done – you’ve been prolific at sourcing.
We’ve been lucky to have strong thesis level support from the fund to stretch into adjacent areas but I’ll talk about a couple of our space deals. One company, OurSky, a space domain awareness company, started by a former VP of software at SpaceX and the cofounder had built a successful consumer IoT company called Smart Things. They’re building the largest network of space observation infrastructure in the world at the lowest cost by building incentive mechanisms to onboard the existing tens of thousands of telescopes owned by amateur and professional organizations around the world that are high enough spec. These telescopes contribute data that’s useful for space situational awareness. 

What about Apex?
It’s a satellite bus manufacturing company. When you send a satellite to orbit, you have essentially two things. There’s a payload, like the sensor, it’s like the communications antenna or the camera or the radar. And then you have the bus which is the housing and all the systems that support that. So, it’s kind of the housing for the payload with the energy generation, the propulsion systems, and the compute. What they’re building is like a modular satellite bus. It’s reducing the lead times required to put something in orbit. It’s more cost efficient and you have price transparency. They’re absolutely ripping. 

What does the typical deal look like for you?
I’d say we’re like an archetypal lead for a company’s seed. We’re generally kind of anywhere up to $5m, maybe $3.5m is the median, for a first check and typically play in the preseed and seed domain. It’s pretty concentrated. Each GP does ~3 deals a year. We try to be pretty hands on, working with the companies. 

You’ve gotten into some really competitive deals – what’s your edge?
Every VC wants to say they’re differentiated. Fundamentally the most important thing that we are giving people is capital. But our physical presence in LA is a huge advantage. 

Of course, we have a platform team and have resources around marketing and pr and a talent team and a finance team. But having your deal partner and board member here in the trenches in southern California with you is such an advantage. 

There’s a lot of fantastic hard tech funds that might have a partner here in LA. But the fund is based in New York, or Texas, or SF. And they’re great funds and do great deals. For us, though, if something comes up, we’re there in person that day. It’s a 25-minute car ride from our office to the factory. 

You grew up in LA but I guess you hate nice weather because you went to Cornell –
I wasn’t trying to escape LA by any means and yeah LA is a pretty idyllic place. I did a college tour and a friend of my older brother went to Cornell. I visited and fell in love with the campus. 

You must have toured it during the summer
Hah, yeah it was late spring, but I think Cornell gets a bad rap about the weather and people from New York City, like you, are wimpy about the weather. Maybe because they’re accustomed to it or grow up complaining about the weather. To me it was fun or maybe so novel I wasn’t even prepared to complain about it. 

Okay, so at Cornell you said I’m going to major in Engineering so I can be a top hard tech investor one day?
Haha, oh boy, yeah I actually started off as an environmental science major but quickly became disillusioned with the program and switched to business with an econ focus. But then I was bored or unsatisfied that I wasn’t pursuing something more technical. So, I graduated a year early and did a master’s degree in material science and engineering. I gravitated to material sciences because I want to understand the world around me and wanted something tangible – it’s the intersection of physics and chemistry. All innovation, it all starts with new materials. The foundation is new materials. Now in the tech and venture world, it’s pretty abstracted from that. 

Well you ended up working for a startup that’s been innovative with materials–
At the beginning of 2019, I got an opportunity to work for Apeel sciences, an agricultural technology startup.

Kind of under the radar but it’s a big company now
Yeah, when I joined it was about 100 employees. They had raised a series B. And in the three years I was there they raised a couple additional rounds – 100’s of millions of dollars – and scaled to 10’s of millions of revenue and hundreds of employees. 

It was founded by a team of materials PhDs out of UC Santa Barbara, which a lot of people would consider to be the number one materials program, at least at that time. They developed a fatty acid based emulsion that can be made from food waste and it extends shelf life.

How does that work?
A couple different ways but primarily through slowing down the respiration rate of fruit and increasing water retention. You get like 2x the shelf life. And food waste is a huge cost for distributors and retailers. 

The margins are so slim in grocery, especially with produce -
The produce supply chain has razor thin margins. So, if you can show your product is accretive to the suppliers, your growth accelerates really quickly. But it’s hard to get adoption initially, since these companies have been burned in the past and don’t have the cushion to take risks. It’s kind of a double edge sword. 

Apeel is in the Upfront portfolio, right?
Upfront led the series A for Apeel but this was back when a series A was a couple of million dollars

So like a healthy pre seed today?
Yeah, the series A of 2014 is the preseed of 2025

Before we wrap up is there anything you particularly want to see – what’s a huge opportunity you’d want to invest in?
I’ll say we’re founder driven, so more than anything I just want to meet exceptional founders. If they come from SpaceX or Anduril or Hadrian, great, but that’s not necessary. I want somebody who has a palpable drive to change something and has great conviction.

The ecosystem is pretty healthy and it’s exceeding my wildest dreams. I think the next step to securing LA as a self-sustaining entrepreneurial community is a couple additional pillars of excellence. SpaceX has done an incredible job on all fronts. Anduril is almost certainly going to be the second pillar. I’d like a couple more later growth stage companies to start churning out talent. And of course, in the hard tech world, it’d be nice to see some strong exits to help justify continued investment. I wouldn’t be investing in these companies if I didn’t think the ROI was going to be there but liquidity, eventually, you know, is good. 

About Morgan Barrett:
Morgan is the creator of Tech Breakfast Club. He hosts breakfast meetups in NYC, LA, SF, (and occasionally Austin, Miami, Boston) that bring together the best founders and investors.

Morgan is also a Startup Lawyer at Optimal, an elite lean boutique startup law firm repping clients funded by a16z, Sequoia, Kleiner, Accel, and countless other VCs. He works with clients from formation to exit, in collaboration with Optimal’s partners.