by Tal Elyashiv, Founder & Managing Partner of SPiCE VC and author, “Investing in Revolutions: Creating Wealth from Transformational Technology Waves“
The world today is on edge. From U.S.–China competition and Middle East volatility to growing calls for fiscal austerity, the geopolitical landscape is more fractured than at any point in the last three decades. Understandably, investors are nervous. Markets are volatile. Private equity firms are sitting on a trillion dollars in dry powder. Venture capital deal counts are down by 25% in Q1 2025 (excluding megadeals like OpenAI). And even institutional investors are trimming exposure to emerging tech.
But here’s the paradox: While these forces may slow investment in certain areas, they often act as accelerants — not inhibitors — for transformational technology adoption. That’s the historical pattern across every major technological revolution we’ve seen. And we’re seeing it again with what I call the Quantum Revolution — the convergence of blockchain, AI, quantum computing, robotics, and autonomous systems.
As I write in “Investing in Revolutions“, “Geopolitical flashpoints, far from halting innovation, have consistently served as focusing mechanisms. They expose inefficiencies, surface national vulnerabilities, and catalyze strategic investments in capabilities that were previously optional.”
This moment is no different.
The Past Is Prologue
Each previous revolution — steam and mechanization, electrification, mass production, and the digital era— was born, matured, or accelerated under geopolitical stress. The Napoleonic Wars supercharged British industrial dominance. The Cold War’s arms race pushed the U.S. to invest in DARPA, semiconductors, and space infrastructure. The internet itself traces its lineage to ARPANET, a defense initiative born of military anxiety.
This isn’t accidental. As nations confront threats to their sovereignty or economic advantage, they invest — urgently and at scale — in technologies that can create asymmetric advantage.
Consider AI. In the wake of Russia’s invasion of Ukraine, and China’s growing assertiveness around Taiwan and semiconductors, Western democracies have ramped up investment in AI-driven defense technologies — drone swarms, battlefield intelligence platforms, and quantum-secure communications. NATO itself has launched a €1 billion innovation fund focused on emerging tech. Meanwhile, the U.S. CHIPS and Science Act earmarks $52.7 billion for semiconductor manufacturing and research — a direct response to perceived overdependence on East Asia.
As the historian Margaret O’Mara wrote in “The Code“, “Silicon Valley didn’t just emerge from garages and venture capital — it grew out of federal spending, defense contracts, and cold war urgency.” That pattern is repeating.
Investors Are Pausing — But Not the Whole Market
Still, recent events have sparked real hesitation. Family offices and institutional LPs are becoming more cautious. A recent BlackRock survey found that 84% of family offices cite geopolitical uncertainty as their top allocation concern, with nearly half increasing cash and alternatives.
In private equity, nearly three-quarters of general partners say global tensions and tariffs are delaying their deployment plans, according to a PwC report. In venture capital, funding is down — particularly in sectors like blockchain and consumer tech. Business Insider recently reported that “hopes of a 2025 VC rebound have dimmed,” due in part to exit bottlenecks and macro instability.
But that doesn’t mean innovation is halting. It’s shifting. Capital is flowing to defense tech, cybersecurity, AI infrastructure, and quantum R&D. Even among cautious investors, 33% say they’re planning to increase risk exposure by the end of 2025 (PGIM). The lesson? Capital is rebalancing, not retreating.
The Next-Gen Arms Race Is Already Underway
What’s emerging now is a bifurcated global tech stack. On one side, the U.S., Europe, and allies are consolidating standards around trusted chips, cloud infrastructure, and AI safety. On the other, China and aligned economies are pushing for sovereign control over their digital, financial, and quantum infrastructure. As I note in the book, “the internet is no longer one network — it’s many, each embedded with values, controls, and dependencies of the governments behind them.”
The implications are enormous. Quantum computing threatens to render today’s encryption obsolete, forcing governments and corporations to prepare for a post-quantum security landscape. Meanwhile, blockchain is becoming a geopolitical tool: Russia and Iran are actively exploring crypto rails and decentralized ledgers to circumvent Western financial sanctions and SWIFT restrictions, while the BRICS nations (Brazil, Russia, India, China, South Africa) have announced collective plans for cross-border CBDCs and blockchain-based payment systems to reduce reliance on the U.S. dollar. Generative AI is already transforming military intelligence operations, from real-time drone swarm coordination to sophisticated disinformation campaigns. At the same time, robotics and autonomous systems are increasingly being deployed to insulate supply chains from labor disruptions and geopolitical chokepoints — illustrated by China’s push for smart factories and the U.S. Department of Defense’s ramp-up of autonomous vehicle contracts.
This geopolitical rivalry isn’t a side note — it’s the central force shaping how and where the Quantum Revolution unfolds.
Government Spending: Accelerator or Brake?
There’s one looming risk that could slow this momentum: domestic political paralysis. In the U.S., proposed federal spending cuts, including reductions in R&D and grants to national science agencies, could threaten America’s leadership. While defense spending may remain intact, broader scientific innovation — from foundational AI research to quantum cryptography — requires sustained public-private collaboration.
A Brookings Institution report warns that “declining federal R&D investment as a share of GDP risks ceding innovation leadership to competitors.” Meanwhile, China has announced plans to spend nearly $1.4 trillion over the next five years on AI, semiconductors, and smart manufacturing.
In a world where technological leadership defines geopolitical power, retreating from public investment would be a strategic error.
So What Should Investors Do?
First, remember this: revolutions are long games. Short-term volatility shouldn’t obscure long-term value creation. As I wrote in “Investing in Revolutions“, “Revolutions happen gradually, then suddenly. The key is to be positioned before the inflection point — not after.”
This is not the time to abandon emerging tech. It’s the time to refine your thesis. Be discerning. Focus on areas where geopolitical urgency aligns with investment tailwinds: AI-driven defense systems, encrypted quantum networks, smart factory automation, and decentralized financial infrastructure.
It’s also important to follow the lead of major players. Microsoft, Alphabet, Meta, and Nvidia are investing aggressively in foundational models, custom chips, and global cloud infrastructure. Amazon is integrating robotics and generative AI into its logistics networks. These aren’t bets — they’re blueprints.
And while blockchain ventures may be facing temporary headwinds in broader venture circles, tokenization of real-world assets (RWAs) is quietly gaining powerful traction — especially among institutional finance leaders. BlackRock’s entry into tokenized funds is a clear signal: blockchain infrastructure is maturing, and the use cases are evolving from speculative to structural.
At SPiCE VC, we’ve long held the conviction that blockchain’s most durable impact lies not in hype cycles, but in its power to rewire how financial assets are issued, traded, and settled. That thesis has been validated time and again. As the first fully tokenized VC fund, SPiCE VC has now executed its third investor payout, with a DPI exceeding 2.1x and TVPI over 6.3x — outperforming even top-decile VC benchmarks. These results underscore a broader truth: while the noise may shift, the signal — the underlying value of transformative technology — remains strong.
This institutional shift toward tokenization is not a detour from the revolution. It’s one of its most important milestones.
Final Thoughts: History Rhymes
Geopolitical stress tests technology. It reveals the strategic value of capabilities that once seemed niche. In the 1940s, radar and codebreaking reshaped World War II. In the 1980s, the space race fueled breakthroughs in computing. Today, it’s drone AI, quantum encryption, and decentralized finance that may define the contours of power.
The Quantum Revolution isn’t slowing — it’s being shaped. Investors who understand the deeper currents — not just the headlines — will be best positioned to capture its upside.
As I conclude in the book: “You don’t need to predict the revolution. You need to understand the pattern. Once you do, you’ll see that even in moments of chaos, the trajectory of transformation rarely bends backward.”
Tal Elyashiv is founder and managing partner of SPiCE VC, the best-performing blockchain venture capital fund. He distills decades of venture capital investment and tech entrepreneurial experience into actionable insights. In his new book, “Investing in Revolutions“, Elyashiv uses vivid examples and practical frameworks to reveal not just how these transformations unfold, but how to identify and profit from them.