The Savvy Logic Behind VC Bets In ‘Uninvestable’ Sectors
A RTP Global partner argues AI is making defense, energy, robotics and government more investable for startups and VCs. He says vertical AI can disrupt incumbents faster than before.
Intelligence analysis by GPT-5.4 Mini
Thomas Cuvelier argues that sectors long seen as too slow, regulated, or complex for venture backing are opening up because AI-native startups can now automate hard workflows and integrate deeply into legacy systems. He says the opportunity is large enough to draw VCs into markets they once avoided.
A long time ago, investors thought some businesses were too hard for new startups to change. Things like defense, energy, and government had too many rules and too much old software.
This article says AI is changing that. New companies can now build smart tools that fit these tough jobs better, like a custom wrench made for one exact bolt.
The idea is simple: if a startup understands a hard industry really well and uses AI well, it can challenge the big old companies. That is why investors are paying attention.
Analysis
The thesis
Thomas Cuvelier, a partner at RTP Global, says the old VC rulebook is changing. Defense, energy, robotics, government, and other “hard” sectors were once avoided because sales cycles were slow, procurement was painful, and compliance made switching software risky. He argues those same barriers are now being weakened by AI-native products.
Why investors are rethinking hard sectors
Cuvelier points to geopolitical instability, supply-chain pressure, and energy security as forces pushing governments and companies to invest more in infrastructure, resilience, and modernization. At the same time, rapid progress in AI and agentic systems is making it easier for startups to build specialist tools for vertical workflows, rather than generic software.
He also says incumbents such as IBM, SAP, ServiceNow, and Schneider Electric are facing more scrutiny because AI changes the assumption that legacy software is automatically safe. In his view, embedded automation can shorten migration from weeks to days, reducing one of the biggest moats incumbents relied on.
What kind of startups win
Cuvelier argues that the strongest new companies will combine operational depth, good UX, fast execution, and tight integration into complex real-world systems. He says many of the most promising founders already come from the industries they are trying to improve, which gives them an edge over general-purpose software teams.
The piece frames this as a larger venture shift: after horizontal SaaS has been heavily mined for value, investors are looking for the next large pools of opportunity. Cuvelier’s conclusion is that AI-native startups serving hard industries are not a side bet, but a route into markets worth trillions.
Key points
- VCs are starting to back AI-native startups in sectors once seen as too complex or regulated.
- The article says AI is making it easier to automate hard workflows and speed up software migration.
- Incumbent software vendors are under more pressure because AI weakens some of their traditional advantages.
- Founders with direct industry experience may have an edge in building these startups.
- The author sees a major venture opportunity in markets worth trillions.
