How to Raise Capital for a Hardware or Deep Tech Startup

Your Startup Needs $200M in Steel and Concrete. Who Do You Call?

Most fundraising advice revolves around software startups—capital-light businesses aiming for blitzscaling user growth. But what if your business involves atoms, not just bits? What if you need to build a massive, physical operation before generating a single dollar of revenue?

This is the challenge Lárus Ásgeirsson and his co-founders at Laxey faced. Their plan: build a state-of-the-art, land-based salmon farm in Iceland. The total project cost was estimated at over $500 million, and they needed to raise the first $208 million in pure equity. They successfully secured over $100 million, including a pivotal $47.8 million round in 2024.

Their journey is a masterclass in how to finance a capital-intensive, "hard tech" business. It’s a different sport than raising for a SaaS app, requiring a different playbook, different investors, and a fundamentally different story.

The Operator's Unfair Advantage

For a project this complex, investors aren't just betting on an idea; they're betting on your ability to execute a massive, multi-year construction and operational plan. Your personal track record is the single most important asset you have. Generic business skills are not enough.

Lárus Ásgeirsson’s resume was his entry ticket. Before co-founding Laxey, he wasn't a serial app founder. He was an operator in the trenches of complex, global industries:

Deep Industry Expertise: He started as an engineer and rose through the ranks at Marel, a startup that revolutionized fish processing with computerized hardware. He understood the seafood industry from the inside out. · Complex Go-to-Market: At Marel, he built global distribution and B2B sales networks for a niche, high-value product. He proved he could penetrate esoteric markets worldwide. · M&A and Integration: He was deeply involved in Marel's aggressive expansion into new industries (poultry, red meat) through major acquisitions—including buying companies larger than their own. He knew how to integrate complex international operations.

When Lárus and his co-founders approached investors, their story wasn't just "the market for salmon is huge." It was "we are the specific people who have the deep, proven experience to manage the construction, logistics, and operations of a $500M industrial facility." Without that credibility, the conversation would have never started.

The Fundraising Playbook for Capex-Heavy Startups

You don’t raise $200M for a factory the same way you raise $2M for an app. Laxey’s approach highlights the key differences.

1. Understand Your Capital Stack

The first rule of capital-intensive business is that equity is just one piece of the puzzle. The goal isn't to fund the entire project with dilutive equity, but to use an initial equity raise to unlock much larger, cheaper tranches of debt.

Total Project Cost: $520M (€500M) · Target Equity Raise: $208M (€200M)

That initial $208M in equity serves a specific purpose: it de-risks the project. It pays for the land, permits, engineering, and initial groundwork. Once these milestones are hit, the project becomes "real" enough for large banks or infrastructure lenders to provide the remaining ~$300M in debt. Your pitch to equity investors is that their capital is the key to unlocking the entire project.

2. Target the Right Investors

Laxey knew that traditional VCs, who look for 100x returns on capital-light software models, were the wrong fit. The risk profile and timeline of a five-year construction project don't align with the standard venture model.

Instead, they targeted "strategic investors who brought not just capital but strategic guidance and networks." For your business, this could mean:

Infrastructure Funds: Specialists in financing large physical projects (energy, transport, etc.). · Specialized Private Equity: Firms with a focus on real assets, agriculture, or industrial technology. · Sovereign Wealth Funds & Pension Funds: "Patient capital" looking for stable, long-term returns. · Large Family Offices: Can be more flexible than institutional funds and may have a multi-generational investment horizon. · Corporate Strategics: Large companies in your industry (e.g., major food producers for Laxey) who want a strategic stake in new technology.

3. Your Pitch Is About De-Risking Execution

While a SaaS pitch might focus on TAM and customer acquisition costs, a "hard tech" pitch must obsessively answer one question: "How do you prove you can pull this off?"

Market Risk Is Low: They started with a known quantity. The global demand for salmon is strong and projected to outstrip supply. This removed a major area of investor doubt. · Geographic Moat: Building in Iceland wasn't a random choice. It provided access to pristine, cold seawater and abundant geothermal energy—a sustainable, low-cost power source that competitors can't easily replicate. · Team Risk Is Mitigated: As discussed, the founders’ deep operational experience was non-negotiable. They proved they had the specific skills required for this specific project. · Financial Model Is Grounded: The financial story for a capex project isn't about viral loops. It's about project finance metrics like Internal Rate of Return (IRR) , payback period , and securing offtake agreements (pre-selling future salmon production to large buyers), which guarantee revenue before you’re even operational.

Common Founder Mistakes When Raising for Hard Tech

Many founders fail at this stage because they apply a software fundraising mindset to a hardware problem.

Mistake 1: Pitching the wrong investors. Sending a deck for a $50M factory to a pre-seed SaaS fund is a waste of time. They operate on different financial planets. · How to avoid it: Do the work. Build a specific list of project finance, infrastructure, and strategic funds. Your "investor-market fit" is as important as your product-market fit.

Mistake 2: Focusing on the "what" instead of the "how." Founders get excited about their world-changing technology but fail to build confidence that they can actually construct and operate it at scale. · How to avoid it: Your pitch deck should have more slides on the execution plan, team experience, and project milestones than on the market size. Dedicate 15-20 slides to breaking down the path from groundbreaking to profitability.

Mistake 3: Having no clear path to debt. Asking equity investors for the full project amount shows naivety. · How to avoid it: Clearly articulate your capital stack. "We need $50M in equity to hit X, Y, and Z milestones, which will unlock an additional $150M in bank financing."

How to Apply This Playbook This Week

If you are building a capital-intensive business, your priorities are different. Here’s where to start:

Map Your "Unfair Operator Advantage." What in your and your co-founders' backgrounds proves you can execute a complex, multi-year industrial project? Quantify it. (e.g., "Managed a $50M factory build-out," "Led a team of 100 engineers."). This is the core of your credibility. · Build a Two-Tier Investor List. Create one list of equity investors (PE, family offices, strategics) and a second, separate list of debt lenders (infrastructure banks, commercial banks). Understand that you are selling two different products to two different buyers. · Outline Your De-Risking Story. On a whiteboard, list every major risk in your project (construction, technical, operational, financial). Next to each, write down the tangible proof point you have to mitigate it (e.g., a team member’s experience, a signed letter of intent from a customer, a patent). This is the narrative of your pitch. · Model Your Project, Not Your Startup. Build a financial model centered on IRR, payback period, and cash flow, not just revenue growth. This is the language project finance investors speak.