In a Crunchbase News interview, Van Espahbodi, a general partner at Generational Partners, said that AI is changing the cost and capability dynamics of hardware, which is one reason software investors are now looking at industrial technology. He described the trend as a notable shift in venture interest.
But Espahbodi, a defense tech veteran, cautioned that many of these investors are "tourists" acting on FOMO. He believes they do not fully understand what it takes to build and scale hardware-heavy businesses, which operate on different timelines, margins, and risk profiles than typical software startups.
The warning is aimed at a moment when AI's influence on hardware is real, but the influx of capital may be outpacing genuine expertise. Espahbodi's comments suggest that while the opportunity is significant, the sector will separate serious builders from those chasing the latest trend.