Defense, energy, robotics and government have historically been classic no-go areas for VC investment. These 'hard' industries have slow procurement cycles, tight regulatory oversight and high-friction customer migration in common. Legacy software vendors serving them have benefited from a barrier of complexity to innovate slowly without facing the risk of customer churn. This made the victims of this year's AI anxiety-driven sell-off all the more dramatic. Software juggernauts serving heavy industries ' IBM, SAP, ServiceNow, Schneider Electric ' have gone from safe bets to being the subject of investor scrutiny. While headlines have attributed that sell-off to quick-fire Anthropic launches of tools for vertical industries, there's more at play. The macro trend is a newfound founder enthusiasm to build AI-native entrants in legacy industries, and the backing they're enjoying from VCs that can see the once-in-a-generation opportunity to disrupt entire industries. Be it the U.S. or...
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