Backing the Foundation Layer: the Celesta Capital Investment Thesis

Our Thesis: Infrastructure Unlocks the Next Wave

Celesta’s core thesis is clear and straightforward by design: breakthroughs in deep tech are the primary driver for every major, economically impactful wave of technological advancement. ‍

The personal computing and mobile revolutions were driven by breakthroughs in processors, memory, battery technologies, power, networking, and others. The mass manufacturing, miniaturization, and proliferation of those devices in turn enabled the app- and SaaS-led value creation of the past decade.

At each instance, for the world to sustainably re-platform around a new major technology shift, the underlying infrastructure must be solid. To power the next century of innovation that we hope to see within AI, autonomy, or renewable energy, we must advance the fundamental technologies – compute, sensing, networking, and materials – that will allow them to efficiently interact at scale with the physical world.

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Defining Deep Tech: Utility Over Spectacle

Celesta defines deep tech as businesses built on strong IP stemming from fundamental scientific or engineering advancements.

We avoid moonshots and speculative science. Instead we seek out proven technical breakthroughs that solve well‑understood problems backed by market urgency. We don’t invest in "what if"; we invest in the essential.

We spend substantial time on technical due diligence and IP in order to deeply understand technology. In more than 100 Celesta investments to date, we haven’t backed a company where the core technology later proved non-functional.

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From Contrarian to Frontier: Why Deep Tech Wins Now

Silicon Valley was built on the deep tech "silicon" of companies including Fairchild and Intel. For a time, the industry focused predominately on pure software, lured by the high margins and low friction. But we are witnessing a correction.

The AI revolution is not just a software trend; it is catalyzing the most profound infrastructure rebuild since the microprocessor. Fulfilling the vision of AI will not come through simply adding it to existing systems – AI is compelling a complete re-architecture of the technology landscape itself. Every product now needs to be reimagined through the intelligence layer, which demands new compute paradigms, new requirements on power and data efficiency, and new modalities of advanced sensing and intelligence.

These technologies have never been more essential – and the market opportunities surrounding them are more attractive than any time in recent memory. This moment represents one of the most compelling times to be a deep tech investor:

• Margin Shift: As software margins compress under the weight of rising AI "compute taxes," skyrocketing demand is driving historic expansion of gross margins for hardware.
• Defensibility: In an era where AI can generate code in seconds, the only true "moat" is proprietary IP rooted in physics and hard engineering.

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Where We Invest: Strategic Points of Transformation

We invest in infrastructure technologies in four key areas, targeting the entry points where we can exert the most influence on the global technology stack.

1. Semiconductors: The building blocks redefining the limits of modern system performance. We invest in fundamental advancements in compute, connectivity, memory, and power to meet the performance and efficiency demands of the AI era. Example portfolio companies include AuraSemi, Credo, DustPhotonics, Eliyan, PowerLattice, SambaNova Systems, Stathera, Tensordyne, UpScale AI, and VeriSilicon.

2. Intelligent Hardware Systems: Hardware-driven systems bringing intelligence into the physical world. We invest in sensing, edge AI, robotics, and autonomy to improve precision and productivity across industrial, enterprise, and consumer applications. Example portfolio companies include Agnikul Cosmos, Boom Supersonic, Cartesian Kinetics, and Tonbo Imaging.

3. Bio-convergence: Evolving biotech into an engineering discipline at the intersection of AI, hardware, and biology. We apply compute, sensing, automation, and data science to improve scale and predictability in diagnostics, imaging, care delivery, and drug discovery – areas where deep tech can speed time to market, reduce cost per test, and improve outcomes by moving care closer to the point of need. By applying deep tech – sensors, automation, and data science – to diagnostics and care, we move from speculative "biotech" to predictable, scalable medical infrastructure. Example Celesta portfolio companies include 1Cell.ai, 5C Network, Berkeley Lights, Alveo Technologies, and Prellis Biologics.

4. Next-Generation Infrastructure Software: Software exposing the underlying capabilities of computing infrastructure. We back the systems software layer that makes computing infrastructure operable at scale (orchestration and control planes, resource optimization across CPU/GPU clusters, data movement and management, observability/reliability tooling, and security), plus the new application infrastructure layer that brings intelligence into real enterprise workflows. Example portfolio companies include Aurascape.ai, Crescendo.ai, Exostellar, H2O.ai, Normal Computing, ParkourSC, Percipient.ai, Platform9, and Slate.ai.

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Intellectual Capital: The Edge in Deep Tech Investing

In deep tech, success often hinges on decisions made early. You must know your non-negotiables and choose the right trade-offs early because the cost of a "wrong turn" is an order of magnitude higher than in software. For example, if your edge is time‑to‑market, ship a product and optimize costs later; if you must win on cost, you can’t hope to reduce costs after adoption – you may never get the chance. The wrong early compromises create more ups and downs that burn cash and time.

This is why a seasoned deep tech investor’s value-add is not just financial, but “intellectual capital”. With a team that has collectively started over 40 businesses and holds 600+ patents, we act as a "stabilizer" for our founders to help reduce growth harmonics – the volatile oscillations between technical breakthroughs and market realities – that can stall growth and sink even the best ideas.

We don’t just coach; we provide the architectural oversight necessary to ensure that early trade-offs (like cost vs. performance) don't become fatal flaws later in the lifecycle.

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Looking Ahead: What’s Old Is New Again

When Celesta launched in 2013, deep tech sat outside the venture mainstream. We built the firm around a contrarian conviction that the most durable value would be created by companies solving hard technical problems in the enabling layers of the technology stack.

Today that conviction is stronger than ever. AI, autonomy, modern healthcare, and industrial transformation all run into the same reality: they must continue to advance their underlying technologies in order to drive performance improvements at scale. The opportunity is no longer theoretical. It is showing up in market demand, capital flows, and the growing importance of defensible IP.

We have been building with this view for more than a decade. Now, we’re glad to see the rest of the market join us in recognizing this potential as well.