Sunny Ray sits down with Tanveer Kathawalla, managing partner of Pioneer1890, an investment firm focused on highly regulated and critical industries. Tanveer explains why his firm acquires legacy industrial manufacturing businesses built by baby boomers, arguing that the tribal knowledge held by aging machinists and suppliers is essential to the future of robotics, drones, and defense production. He details the origin of the firm's name, drawn from the Frederick Jackson Turner thesis about the closing of the American frontier in 1890, and draws a parallel to today's shifting industrial and demographic landscape. Drawing on his own experience building a satellite startup, where a single foot of thermal tape cost fifty thousand dollars due to supply chain constraints, Tanveer describes why tier two and tier three suppliers, not flashy defense tech startups, hold the real leverage. The conversation covers succession issues among family owned manufacturers, the shortage of non destructive testing businesses, how Pioneer1890 pitches itself to sellers as a permanent home rather than private equity, and why he believes America's defense industrial base is fragile. He closes by sharing where listeners can follow the fund's progress.
A defense investor argues aging machinists, not flashy startups, hold the keys to America's robotics future.
What is Pioneer1890? Why should people care?
We are an investment firm focused on highly regulated and critical industries. We have two focus areas. One is acquiring legacy industrial manufacturing businesses with specialized knowledge that is not written down anywhere and will be critical for defense and the future of robotics. The second is acquiring stranded technology and venture companies with great design and IP that did not get the business scale they needed, then rolling those designs into a company to help scale them.
Why did you name the firm 1890?
1890 was the year of the Frederick Jackson Turner thesis, which said that once all American land was claimed, opportunity had to be found in a non agrarian way, which propelled the industrial revolution. I think we are at a similar moment now, with the industrial age changing, the postwar order shifting, and boomers leaving the workforce. That is the ethos behind how we want to invest and build companies.
What were you doing before Pioneer1890 that led you here?
I ran a deep tech startup and then a defense tech private equity backed company. While building a satellite company that put lasers on small satellites to create a cell network in space, I needed about a foot of specialized thermal tape, but the smallest quantity available was a fifty thousand dollar roll, because it was designed for companies like Lockheed Martin. That experience showed me how big a constraint the supply chain really is.
Why acquire tier two and tier three suppliers instead of a new defense tech startup?
These suppliers have the tribal knowledge needed to make the highly engineered components used today and the components needed for robotics, drones, and AI infrastructure. It is like a grandmother's cookie recipe that was never written down but always works through judgment and experience. Being able to capture and absorb those judgment based lessons is critical to making sure these suppliers can keep producing the parts the future needs.
What happens to a supplier when the person who knows everything retires?
They often limp along for a while, but eventually quality diminishes and they start losing contracts until the business withers. In a lot of lower middle market family run businesses, I call it the bus test. If two or three people in that organization were hit by a bus, the business would no longer exist. Even Boeing once halted 737 production because the retired parts manager was the only one who knew where the parts were.
What is the shortage that nobody is funding right now?
Non destructive testing businesses. If you are building autonomy software for a drone, you need to make sure the parts do not explode and pass basic safety protocol before they go on a Navy ship or anywhere else. There is a gigantic shortage of businesses that can test those materials and new designs to meet the safety requirements that the military and large industrial organizations require.
What breaks first if the US has to surge defense production in the next five years?
If the next war looks like drone warfare, we will struggle immensely, because the US has so much more regulation and red tape than a country building a million drones a month. Our systems are very specialized. Sixty percent of the parts in an F-35 are completely sole sourced, with only one person who makes them, which shows how fragile our production base really is.
What do the next 90 days look like for Pioneer1890?
We are focused on the acquisition end and hope to close our first set of acquisitions by the end of the year. One is a legacy parts supplier that makes parts for refueling aircraft and the C130 troop carrier used by militaries worldwide. We are also looking at acquiring another shop in California so we can service both the Atlantic and Pacific fleets.
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