Rebuilding the American Industrial Empire with Cyrus Ventures' Jordan Yashari

Jordan Yashari is the founder of Cyrus Ventures, a defense and energy-focused fund investing in hard tech startups building critical infrastructure for national security.

What led you to start a venture fund focused on defense and energy?

I like to jokingly say I was never meant to be a VC. I'm a Persian Jew in LA. Like all Persian Jews in LA, my family is in real estate, as was I. A few years ago, I was looking to diversify our investments. I took a hard look at what we had: 98% real estate, 2% real estate debt. There was nothing in any other sector, and so we started sourcing new opportunities through our networks. One thing led to another and I got introduced to an aerospace fund. However, my father thought it was nonsense. “You're not going to make money investing in satellites.”

After a lot of my own homework, I realized there was a real opportunity even though he was missing and invested most of what I had at the time into the fund. As anyone does when you're putting so much of your own net worth into something, I became the most annoying person they've ever dealt with. I was doing diligence on every company they were talking to, companies they weren't even talking to, and sometimes I had updates they didn't even have yet. I stalked people on Twitter, went on site visits, and slowly but surely I became engrossed in this new world.

A couple of years later, one of the portfolio companies got acquired by Anduril. The fund had legal language in one of their vehicles, coupled with some pressure from one of their investors, that pushed them to liquidate the position. I told them not to do it, and I asked if I could buy my own piece. They said the process of transferring interests was complicated but I could try to buy the vehicle. I'd been working at real estate shops that do tens of millions in equity. I thought I could easily pull this together. I was very much wrong about that. Real estate investors and venture investors are polar opposites. You're going from the most stable cash-flowing asset on the planet to some of the riskiest opportunities ever.

Over six months I raised the money, and the fund honored their promise to sell to me at the agreed price. It didn’t take long before people started asking what else I was looking at. I referred them to Impulse Space through the same fund that had sold me Anduril. I believed in the opportunity and it was a thank you for honoring the deal. But after I brought in a substantial number of investors, they chose to compensate me for it and make me a co-GP on the vehicle. That’s when I realized I’m pretty good at this. I could explain these opportunities to investors and why they should diversify. Almost no one in my network was looking at these companies or knew how to underwrite them - that was my opening. 

Why are defense and energy the two core pillars of your investment thesis?

They're interdependent. Energy security is what allows a country to be defensible. If you can knock out the power grid of any country, their defense systems are useless. That's why we spend so much on backup iterations, generators and systems. The biggest threat isn't a nuclear missile - it's an electromagnetic pulse.

There hasn't been scaled innovation in the energy space for a long time. Meanwhile, defense is innovating to the point where systems that previously weren't energy dependent are now highly dependent on large quantities of non-intermittent energy like drones, laser defense systems and autonomous vehicles.

There's also a huge pivot happening right now where the little guys are winning bigger contracts and competing with the primes. It started with SpaceX and Palantir suing for the right to compete and now the doors have been blown open. Anduril is threatening the likes of Lockheed Martin and Raytheon for contracts. A founder can be just out of college, have no real contacts, and start building and winning if they’re good enough. 

To be clear, I don’t root for war, but if it's going to happen, let's support the things that remove humanity from the equation. I'd rather there be drone-on-drone warfare than human-on-human. Let's support technology that focuses on defense and deterrence. We already have the biggest nuclear arsenal. We've used only two nukes in our history as a nation. So much of modern defense is not about building more missiles. It’s about having systems in place so that any aggression means mutually assured destruction. 

How did you build out the technical diligence capability at Cyrus Ventures?

A lot of the VCs I was talking to had technical prowess but didn't have the means of doing deep technical diligence on deep technical concepts. It sometimes felt like Wall Street brokers trying to understand rocket science. Many of these funds rely on outside consultants or other founders to do a quick dive and flag red flags. 

The issue with a one-time paid consultant is that more often than not you're going to give the person paying you an answer that aligns with what they wanted to hear, not what they needed to hear. You don't care what happens six months later because you got paid and you're out. So I thought about how to find experts and get them to care as much as I do. 

In real estate, I was used to working with architects, general contractors, environmental specialists and more. Every single one gave me their opinions, but if any of them said don't do it, it was an easy decision. I decided to take it one step further: directly compensate my team from the profits the fund would make, instead of up front. 

Over the next few months, I got introduced to four brilliant engineers who had been at SpaceX, JPL and elsewhere. They had been founders in their own right and worked at or started nuclear and deep tech startups. Now their incentive was aligned with my own. If I made money, they made money, and somehow, I convinced four talented people to join me at my new fund, Cyrus Ventures.

I named the fund after Cyrus the Great. Being Persian, I love his story. He believed in freedom of religion and had the first recorded Bill of Rights. As a Persian Jew, that history matters to me. My parents escaped Iran during the revolution and emigrated to the U.S. We consider ourselves Americans, and the thought behind Cyrus Ventures is how we contribute to the next American Empire. The U.S. has been falling behind in a lot of capacities, and Cyrus is my way of doing something about it. 

What makes your approach to technical diligence different from traditional VCs?

It's all relationships, people and connections. Knowing what others don't know. I jokingly say that in real estate, insider trading is legal. If you know the details of how a building is operating, you can make better deals and more money. The same applies to venture. It's just been rebranded as due diligence. If I know that a company's head of engineering is about to leave, then the company is probably overvalued because they're about to lose a key cog. That's important information most people wouldn't know. Sometimes the quietest guys are the ones doing the most.

Take Antares Nuclear. I know what's going on because I have a team member who was head of engineering there for a while, I have a team member that contracts there, I have a team member who is the co-founder of their biggest competitor, and I now consider the CEO a friend. This isn't an ad for Antares. I genuinely hope multiple nuclear startups succeed. We need a bunch of variations, and they’re all doing slightly different things. But a lot of people are throwing money at crazy valuations assuming there will only be one winner, and many of them aren’t doing enough homework. That's the difference between barely getting your capital back and returning multiples

Tell me about the physical campus you're building for hard tech founders.

I got asked to speak at an investor summit at New Lab in Brooklyn. It's kind of a WeWork for hard tech founders. While there, I had this epiphany: Why don't we have this in El Segundo? This is the mecca of aerospace, defense, energy and hard tech. We need this.

A family I'm close with owns the Hawthorne Mall. It's been vacant for a while. A million square feet of rentable space on 25 acres of land. We're going to take an old JCPenney and convert it into this space. The whole facility will be around 100,000 square feet. The idea is to provide facilities, technical advisory and everything else needed for companies to get started and get to a prototype faster, and in exchange companies provide warrants for equity and pay a membership fee. I plan to call it Cyrus Labs. 

One of the biggest value adds is having experts in-house. A brilliant 25-year-old who spent three years at SpaceX doesn't necessarily know how to use a CNC. I don't want them using it because I don't want them to break it or hurt themselves. Their options are spending tens of thousands monthly on an expert or learning it themselves and delaying for weeks. Having those people in-house could save founders months.

My fund’s advisors already guide every company we invest in. They hold degrees in materials science, mechanical engineering, electrical engineering and computer engineering. Expand that to a team of ten advisors with office hours, and you have the dream team for tech startups. And unlike professors, advisors would also own a piece of every company through Cyrus Labs, making them care as much as the founders about success. 

Then there are demo days. Founders normally stop building to fundraise and win contracts. Instead of road shows, we bring the customers and investors to them. Quarterly demo days for investors and government partners. Founders don't have to find the right people. We bring them.

What's the relationship between your fund and the physical campus?

They share a philosophy. Similar to the fund, we diligence founders who want to join the campus. Once you’re a member of Cyrus Labs, you get access to every resource we have, and when you’re ready to grow out of the space and into your own facility, Cyrus Ventures will be there to back the founders we believe in. It's not a cohort or program. How long you're there and what you make of it are up to you. 

What makes you the person to do this?

Every founder needs to understand their superpower. Mine is simple: I love talking to people. I like meeting new people, learning from them and connecting with them. That’s how Persians do business, it’s social. You have someone over for dinner with their family, and next thing you know, you're starting a project together. It was never the intention. You just liked the person.

All my investors are people who have known me for years and trust me because of it. When I pursue an idea, I loop in people who trust me and believe in the concept. Especially in the case of Cyrus Labs, everyone has to benefit. The architect doesn’t care about a one-time buildout. He cares about the 20 to 50 companies a year that might come through fully funded and needing new space. This is true for everyone involved, even the landlord. This is 100,000 square feet out of a million. But if Cyrus Labs brings him the next Anduril that rents a huge chunk of his space, he’s thrilled. 

Like most Persian immigrants, my parents came to this country with nothing and built a life here. That’s only possible in a place with stability, opportunity and abundant energy. The most successful countries per capita are the safest and most energy abundant. There's a direct correlation to the success and welfare of citizens. I’m trying to play just a small part in getting us there, and hopefully making some money for my investors along the way.

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