In this episode of Building the Base, Hondo Geurts and Lauren Bedula sit down with Paul Kwan, Managing Director at General Catalyst, where he leads the global resilience investment team, recorded live at the Reagan National Defense Forum in Simi Valley. Paul traces his path from reading The Hunt for Red October in sixth grade to becoming one of the original defense tech VCs, and walks through what venture capital actually is and how it differs from private equity. He discusses General Catalyst's 25 years in the space, including backing Anduril early on, and explains how private capital funds R&D for the next generation of defense companies. The conversation covers the economics of VC, common misconceptions about venture capital and technology development, and Paul's reaction to Secretary Hegseth's acquisition reform speech.

Five key takeaways from today's episode:

1. Venture capital funds operate on 10-year timeframes compared to private equity's typical 5-7 year windows—a structural difference that allows VCs to take a longer-term approach while defense companies work through the challenges of manufacturing hardware at scale.
2. Private investors fund R&D upfront in the venture model, betting that a small percentage of portfolio companies will become large enough to go public or get acquired, a different approach than traditional models where government funded product development from the start.
3. Re-industrialization requires investment across the entire industrial stack. Beyond defense platforms, success depends on building out manufacturing software, testing infrastructure, electronic supply chains, and energy systems to enable production at the speed and cost needed.
4. Large fundraises reflect market confidence in future contract awards. When VCs invest significant capital, they're anticipating that government contracts will follow. If those contracts don't materialize, it creates challenges for the innovation ecosystem that funded product development.
5. First-of-its-kind defense tech business models represent new market categories. These companies may be valued differently than traditional defense contractors, similar to how technology disruptors in other industries trade at different multiples than legacy incumbents in their sectors.