VC experts on why Physical AI funding is heating up | E2333This Week In Startups is made possible by:partner 1 - linkpartner 2 - linkpartner 3 - linkToday's show:Are we one step closer to data centers in space? Katelin Holloway of Seven Seven Six and Paige Doherty of Behind Genius Ventures break it down what it would take.Plus investor interest is surging in Physical AI companies. Paige explains why she backs applications of physical AI over general-purpose robotics, and how her thesis on multimodal AI led to the largest check she's ever written.We then dive into the Pentagon's rollout of ChatGPT Mil and Grok for Government. And Katelin gives us her insight into how VCs are investing in Europe and the regulations behind the scenes.Guests:Katelin Holloway on X: https://x.com/katelin_cruseSeven Seven Six: https://sevensevensix.com/Paige Doherty on X: https://x.com/paigefinnnBehind Genius Ventures: https://www.behindgeniusventures.com/Full Transcript and Summary, powered by Plaudhttps://plaud.ai/twistRelated Links:Department of War adds ChatGPT Mil and Grok for Government: https://fortune.com/2026/09/01/pentagon-chatgpt-grok-government-military-ai-members-pete-hegseth-defense-department/OpenAI for Government: https://openai.com/global-affairs/introducing-openai-for-government/Starshield — SpaceX's government/defense arm: https://www.spacex.com/starshield/UN work on LAWS (Lethal Autonomous Weapons Systems): https://disarmament.unoda.org/the-convention-on-certain-conventional-weapons/background-on-laws-in-the-ccw/European Commission designates ChatGPT a VLOSE: https://digital-strategy.ec.europa.eu/en/news/commission-designates-chatgpt-reddit-roblox-under-digital-services-actCommission press release: https://ec.europa.eu/commission/presscorner/detail/en/ip_26_1772Euronews on why a chatbot that searches the live web counts as a search engine: https://www.euronews.com/next/2026/08/31/eu-places-chatgpt-reddit-and-roblox-under-strictest-digital-safety-rulesEntrepreneur First: https://www.joinef.com/posts/introducing-the-bridge/Henrick Johansson, the European VC persona: https://x.com/compliantvcStarcloud — orbital data centers: https://www.starcloud.com/Starcloud raises $250M at a $2.3B: https://www.businesswire.com/news/home/20260821884035/en/Starcloud-Raises-$250-Million-at-$2.3-Billion-Valuation-to-Scale-AI-with-Orbital-Data-Centers"From Sputnik to Starship: Estimating the experience curve of space launch technology" https://academic.oup.com/pnasnexus/article/5/7/pgag217/8732400Cambridge Bennett Schoo: https://www.bennettschool.cam.ac.uk/blog/is-space-trade-the-next-global-transport-revolution/Crunchbase News: physical AI startups raised $47.4B across 521 deals in H1 2026: https://news.crunchbase.com/venture/physical-ai-funding-startups-robotics-aerospace-h1-2026/Crunchbase News on record defense-tech funding: https://news.crunchbase.com/defense-tech/startup-venture-funding-all-time-record-ai-anduril/Jensen Huang's prediction: https://www.nvidia.com/en-us/executive-insights/Zipline: https://www.flyzipline.com/Nox Metals: https://www.noxmetals.com/CNBC: Anthropic changes its data retention policy: https://www.cnbc.com/2026/09/01/anthropic-data-retention.htmlBloomberg on the plan to let enterprises hold the 30-day window: https://www.bloomberg.com/news/articles/2026-08-20/anthropic-plans-to-change-data-retention-policy-for-advanced-aiPlaud — sponsor; the wearable AI note-taker → https://plaud.ai/twist (code TWIST for 10% off)Harmonic: https://harmonic.ai/twistTimestamps:Subscribe to the TWiST500 newsletter: https://ticker.thisweekinstartups.comCheck out the TWIST500: https://www.twist500.comSubscribe to This Week in Startups on Apple: https://rb.gy/v19fcpFollow Lon:X: https://x.com/lonsFollow Jason:X: https://twitter.com/JasonLinkedIn: https://www.linkedin.com/in/jasoncalacanisCheck out all our partner offers: https://partners.launch.co/Great TWIST interviews: Will Guidara, Eoghan McCabe, Steve Huffman, Brian Chesky, Bob Moesta, Aaron Levie, Sophia Amoruso, Reid Hoffman, Frank Slootman, Billy McFarlandCheck out Jason's suite of newsletters: https://substack.com/@calacanisFollow TWiST:Twitter: https://twitter.com/TWiStartupsYouTube: https://www.youtube.com/thisweekinInstagram: https://www.instagram.com/thisweekinstartupsTikTok: https://www.tiktok.com/@thisweekinstartupsSubstack: https://twistartups.substack.com