Sovereign-Aligned Venture Capital with America's Frontier Fund's Brian Wilcove

Brian Wilcove is the managing director of America's Frontier Fund, a sovereign-aligned venture capital firm investing in frontier technologies to strengthen U.S. innovation and economic competitiveness.

You have an unusual background for a deep tech investor. How did you end up here?

A very unusual story. I have a history degree and I'm investing in deep tech. I was always interested in constitutional law as a kid. I deeply believe in economic systems that align with democracy because that structure aligns with human nature most perfectly. So I went to college thinking I was going to be a constitutional lawyer. After graduation I went to work at a law firm prior to taking my LSATs and absolutely hated it. It was too slow and stale.

I fortunately found my way to New York City, working for ANS, which operated the NSFNet backbone in the mid-1990s. It was the precursor to the commercial internet. I wasn't making a ton of money, so I lived out on Long Island and had an hour and 45-minute commute on the LIRR each day. This was before connected cell phones and the internet as we know it today. I started reading novels and that got boring, so I picked up tech books. The first couple were an HTML coding book and then a TCP/IP book. From there I expanded into semiconductors, battery chemistry, and all kinds of different areas. I continue to do that to this day. I'm a voracious technical and science reader. Entirely self-taught.

That was during the telecom boom, which feels very similar to what's going on now with AI. Lots of capital and infrastructure being plowed into the ground. I spent about 10 years climbing the ranks, mostly running P&Ls and doing product management for what's now Verizon. Then I was early at Qwest Communications in Denver when it was a startup. I exited that company when we were 65,000 people. A couple of friends and I started a company called Virtela that was funded by Norwest and NEA. We exited that company as well. Then in 2001 I got recruited into venture capital at the principal level. I've climbed through the ranks over the last 25 years to now starting AFF and being the managing partner.

For those who aren't familiar, what is America's Frontier Fund and why did you start it?

We call it a sovereign-aligned venture capital firm. We have three legs to the stool. We actually started off as a nonprofit, so we have a nonprofit arm of AFF. The other two legs are the funds business, which currently includes two funds: FF1 Alpha, our main fund, and Roadrunner Fund, our smaller incubator fund. Then we have Roadrunner Studios, which is the actual studio incubator itself.

The reason for our existence came from two or three signals. We've been investing in deep tech and hard tech spaces for a long time, and the sector always had two problems that kept it from breaking out. One was a very protracted R&D cycle. Most of these technologies come out of a lab or some deep technology that needed experimentation to figure out. In the past you really had no control over how long that would take. The second problem was that once you got to market, there was a lack of growth capital to accelerate.

Two things simultaneously changed. First, AI and compute reached a point where it became inexpensive enough to apply to the physical world. You could apply it to biology problems or chemical problems or material science problems and shrink the time to figure out a product and get to market. You could synthesize or virtualize experiments very quickly and run a lot of iterations. 

The second big shift was the emergence of sovereign capital. What does that mean for us? We're U.S.-aligned, so our funds are U.S.-based technology investments that are nationally oriented and help the nation. And that's not only defense tech. It includes economic growth, workforce development, and job creation. If you add up the capital that the U.S. has allocated, not including the Department of Defense, it's about $1.7 trillion sitting in the CHIPS Act, the IRA, NASA's budget, the FDA, ARPA-H, and ARPA-E. That dwarfs any amount of venture capital, no matter how big the funds are. We knew that money needed a shepherd to direct it to the best opportunities. So AFF basically sits between government entities and our portfolio company startups and helps them get capital, access to policy, and work with governments.

Can you walk through the fund structure and the partnership with the Office of Strategic Capital?

We were the first fund to go through the OSC program. The State of New Mexico's State Investment Council is a big investor in both funds and anchored them. We did some press to announce that, and the Department of Defense's Office of Strategic Capital reached out to us. They were trying to do something very similar to what we were doing: unlock capital in underrepresented technology domains.

The DoD worked with the SBA to rebuild an old program into what's now called the Critical Technologies Program. They approached us and said they thought they had it figured out and asked if we'd be willing to be the first guinea pig. We eventually said yes. We were the cotton through the straw, helping them build the program as we were building the firm simultaneously.

Where we ended up is that we're the largest CTE fund. We have $175 million from the program. It's a quasi-loan with some equity-like features and some debt-like features, and it sits alongside $140 million in private capital. Those two combined form FF1 Alpha, which is about a $325 million vehicle. Sitting next to that is Roadrunner Fund 1, another $65 million pool. The Roadrunner Fund is really meant to invest alongside companies being incubated out of the studio, so those tend to be pre-seed, sub-million-dollar investments. The FF1 Alpha fund is roughly two-thirds seed, Series A, and Series B, with one-third later stage.

How does sovereign capital help your portfolio companies reach scale?

If you look at deep tech, many of the early examples took government capital in some form to reach scale. These technologies by and large need to reach some level of scale in order to be economically viable. Sometimes the Department of Defense is willing to bridge that gap because they want something and they're willing to pay more. Palantir is an example of that. But there are also examples where government capital basically bootstrapped or accelerated a company's ability to reach scale. SpaceX is a perfect example. NASA was the first contract. Tesla was another one, with a $400 million loan from the Department of Energy.

Elon Musk has actually figured this out. They don't really talk about it as a strategy, but if you look at his portfolio of companies, that is the strategy: figure out how to get some sovereign capital, get to scale, and then cross over into lower-cost consumer goods. Our view is similar. How can we help our portfolio companies find non-dilutive capital, low-cost debt, or government customers that could be the DoD, ARPA-H, or the FDA and then help them reach scale quickly?

We do an extra step during diligence at AFF that I didn't do at my previous firms. We ask: where do we think we can find sovereign capital for this company? It doesn't have to be guaranteed. We just need a list that tells us these programs matter and that we think we can help navigate some sort of capital. But it's not a requirement. We're a standard venture fund where the only metric is returns. We're looking for companies that can generate returns but also add economic value to the U.S. industrial base.

What could the government be doing to better support the deep tech ecosystem?

Government is really good at infrastructure. You see policy trying to bring back semiconductor manufacturing with TSMC building in Arizona. You see a lot of activity in critical minerals. The OSC organization inside the DoD that sponsored us has a couple hundred billion dollars, and maybe a hundred billion of it is geared toward critical minerals. Where platform technologies meet demand is where the government does really well. I don't think they want to be in the business of picking winners. They want to enable industries. The policies that work tend to be focused on that.

For example, I've been having a lot of conversations with folks inside the government around reshoring pharmaceutical materials, because all of that is offshore. It doesn't get made or processed in the U.S. The question is what's necessary to bring that capability back and how they can invest in or enable something that would grow that ecosystem at large. That's where it works.

The narrative around the tech sector's relationship with the government has flipped a lot in the last couple years, largely driven by Anduril and Palantir trading at huge multiples and SpaceX's success. All of these trends are coalescing back toward the government being an active player. We saw that three to five years ago, which is part of why we started AFF. Firms like Andreessen Horowitz raise five, 10, or $15 billion funds. That is nothing compared to $1.7 trillion. When a player starts to put that kind of capital to work, it attracts firms like us, other VCs, entrepreneurs, and public market investors.

You've lived through two bubbles. Are we in one now?

So bubbles pop and then collapse. I lived through the 2000-2001 bubble, which lasted five years. My first job in venture, I was in triage mode for the first four and a half years of my career. We didn't do one deal as a firm until 2005. I saw every manner of collapse possible, and it was great training. Then I saw 2007 and 2008. That didn't last long, maybe 18 months.

I'm not sure we're in a bubble. The venture game has always been about two things: arbitrage and big outsize winners. When I first started in this business, a $300 to $500 million exit was a huge exit. I remember one deal that got over a billion dollars and I couldn't believe how big it was. Fast forward to today and we're doing billion-dollar pre-money valuations. SpaceX is a $1.5 trillion company. Exit sizes in the winners have risen faster than the capital going into the system. Venture has always been a hits-based business. As long as you're in one of those winners, it doesn't matter what you paid. People's calculus is that they can pay $100 million or $200 million pre-money because if the outcome is a trillion dollars, the entry price is irrelevant.

The question is whether these trillion-dollar companies are going to be sustainable and continue to grow. I don't think we'll see a collapse. There are lots of high-priced, high-valuation companies chasing the opportunity to be a trillion-dollar company that won't get there, and there will be a lot of pain in that process. But at a macro level, I don't think so.

What advice would you give deep tech founders who are pitching you?

Most of the time the tech is good. Competitive analysis, all those things are pretty good. I'd say there are two areas where people should focus more. The first is go-to-market. How are you actually going to find customers? If you're in an elevator with a potential customer and they say they want one, how do you deliver it? How do you price it? How do they get it? People don't spend a lot of time thinking about that up front.

The second, and this is my pet peeve inside AFF, is unit economics. I don't like perennial, forever businesses that require subsidies. If the business has a subsidy in some form to get it up the scale curve and down the cost curve, that's great. That's what we're looking for. But if you're in a 10 percent gross margin business forever, that's tough. You just don't have room to grow. We're looking for things that might be unprofitable to start with but have potential to be highly profitable at scale.

How do you define deep tech?

Technology that's underpinned by either biology, chemistry, or physics.

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