VC experts on why Physical AI funding is heating up | E2333

Watch on YouTube ↗  |  September 02, 2026 at 23:31  |  1:19:47  |  This Week in Startups
Speakers
Paige Doherty — Founding Partner, Behind Genius Ventures
Katelin Holloway — Founding Partner, Seven Seven Six
Jason Calacanis — Angel Investor / Founder, LAUNCH

Summary

This VC roundtable covers the surge in physical AI funding, defense and sovereign AI adoption, EU regulation, and space infrastructure. Katelin Holloway discusses non-consensus bets like StarCloud orbital data centers and an undercapitalized Europe/Switzerland tech opportunity. Paige Doherty explains her preference for verticalized physical AI applications and edge AI, while Jason Calacanis adds that companies may need to build vertical on-prem LLMs rather than depend on Frontier Labs.

  • Physical AI startups raised nearly $50B in H1 2026, up 80% from 2025.
  • Paige favors verticalized physical AI applications that reach revenue faster and dilute less than general-purpose robotics.
  • Katelin highlights StarCloud's $2.3B valuation after Nvidia and Cisco invested.
  • The panel discusses the Pentagon rollout of ChatGPT Mil and Grok for Government.
  • Katelin argues Europe and Switzerland are undercapitalized, especially Zurich physics and quantum work.
  • Jason predicts Apple may buy Perplexity and emphasizes on-prem and vertical LLMs to avoid frontier-lab dependence.
Ideas
Paige Doherty Founding Partner, Behind Genius Ventures 2:51
Nox Metals modernizes a huge metals market
Paige says Nox Metals is one of her fastest-growing portfolio companies: it is a next-day metal servicing platform between steel mills and downstream aerospace/defense manufacturers, addressing a $200B market with fewer than 40 software engineers employed in the industry.
Nox Metals MED
Katelin Holloway Founding Partner, Seven Seven Six 24:24
Europe's Zurich tech is undercapitalized
Katelin offers a contrarian Europe view: US VCs are irrationally scared of regulation, and Europe, especially Zurich, Switzerland, is producing some of the best physics and quantum work in the world while remaining dramatically undercapitalized. She would rather back a rational-priced Zurich quant team than another US agent wrapper.
VGK EWL MED
Paige Doherty Founding Partner, Behind Genius Ventures 27:33
EU regulation creates compliance moat
Paige says heavy EU regulation creates a moat for startups willing to eat the frog and do compliance first. Her portfolio company Mezzo built its AI engine to work in the hardest regulatory environment so it can later expand into less regulated markets.
Mezzo MED
Katelin Holloway Founding Partner, Seven Seven Six 30:35
StarCloud orbital data centers are winning
Katelin made a non-consensus seed bet on StarCloud, which puts GPUs on solar-powered satellites and has now reached a $2.3B valuation with Nvidia and Cisco investing. She believes orbital data centers are made viable by collapsing launch costs and the team's audacity.
StarCloud HIGH
Katelin Holloway Founding Partner, Seven Seven Six 42:08
HGEN displaces natural gas with onsite hydrogen
Katelin reverse-engineered an infrastructure-for-the-inevitable investing framework and cites HGEN as an example: on-site hydrogen production for heavy industry that can take out natural gas and sits upstream of industrial re-shoring and energy bottlenecks.
HYDR MED
Paige Doherty Founding Partner, Behind Genius Ventures 45:31
Edge AI wins for sensitive factory data
Paige's 2024 multimodal AI thesis led her to back Manva, which runs local edge AI models on factory floors for quality assurance and safety. She believes edge AI is the future where sensitive data or compute constraints make cloud-only models unworkable.
Manva Edge AI MED
Katelin Holloway Founding Partner, Seven Seven Six 53:44
More launch providers will win space
Katelin argues the US space economy should not be a SpaceX-only single point of failure. She believes multiple launch providers can win without catching SpaceX, and Stoke Space's fully reusable two-stage rocket is one such delivery-van beneficiary.
U.S. space economy MED
Paige Doherty Founding Partner, Behind Genius Ventures 58:41
Vertical physical AI reaches revenue faster
Paige focuses on verticalized physical AI applications rather than general-purpose robotics because they reach revenue and commercialization faster and avoid the massive dilution of capital-intensive general-purpose platforms.
Verticalized physical AI HIGH
Katelin Holloway Founding Partner, Seven Seven Six 64:15
Top talent is now building physical AI
Katelin sees the physical AI and hardware boom as more than a bubble: the best engineers have shifted from ad tech to building rocket engines and hard tech, and hardware is now treated as a moat. She echoes Jensen's prediction that every industrial company will become a robotics company.
Physical AI HIGH
Jason Calacanis Angel Investor / Founder, LAUNCH 74:30
Build vertical on-prem LLMs, avoid labs
Jason argues startups built on Frontier Lab APIs risk being rug-pulled as labs face pressure to compete; the winning response is to build vertical open-source models on-prem, citing 11 Labs, Lovable, Figma, and Lora's legal vertical models.
On-prem AI Vertical LLMs MED
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This This Week in Startups video, published September 02, 2026, features Paige Doherty, Katelin Holloway, Jason Calacanis discussing Nox Metals, VGK, EWL, Mezzo, StarCloud, HYDR, Manva, Edge AI, U.S. space economy, Verticalized physical AI, Physical AI, On-prem AI, Vertical LLMs. 10 trade ideas extracted by AI with direction and confidence scoring.

Speakers: Paige Doherty, Katelin Holloway, Jason Calacanis  · Tickers: Nox Metals, VGK, EWL, Mezzo, StarCloud, HYDR, Manva, Edge AI, U.S. space economy, Verticalized physical AI, Physical AI, On-prem AI, Vertical LLMs