Jack Selby, a longtime managing director at Peter Thiel’s family office Thiel Capital, secured an early stake in the hot AI chip startup Etched by betting on an unusual currency: Arizona’s semiconductor industry connections. The four-year-old startup, now valued at $5 billion, announced this week that TSMC had manufactured its first chip earlier this year, and plans to ship systems powered by that chip to customers later this summer.
A $120 million bet with a manufacturing promise
When Copper Sky Capital, the Phoenix-based venture firm Selby founded in 2021, invested in Etched’s $120 million Series A two years ago, the deal came with a condition. Selby, a former PayPal executive, helped secure the allocation by promising to assist the startup in eventually reshoring its chip fabrication to Arizona.
Also read: Mega takeovers push global M&A to record $2.8 trillion in 2025
“When Copper Sky invested with Etched, the company clearly understood our connectivity to the Arizona semiconductor industry, and in particular the local TSMC GIGAFAB,” Selby told TechCrunch.
The strategy reflects Selby’s broader thesis: that most coastal startups, particularly those based in California, Massachusetts, and New York, are overpriced compared to companies emerging in the Southwest. But rather than simply avoiding those markets, Selby saw an opportunity to bridge the gap by helping California-based hardware startups move their production to Arizona.
Also read: EEOC Sues FedEx Over Alleged Discrimination Against Blind Workers
From Arizona-first to national expansion
Copper Sky’s first $115 million fund focused primarily on startups based in Arizona and the Southwest. The firm has since expanded its focus beyond the region to include non-traditional venture hubs nationwide. Selby said the firm is also interested in backing hardware companies, including those in the defense sector, that can set up manufacturing operations in Arizona.
The firm is expected to have more capital to deploy soon. Copper Sky is currently raising a $300 million second fund, according to a regulatory filing, which would allow it to invest in higher-priced coastal companies and others across the United States.
Etched’s manufacturing bottleneck
For Etched, the immediate challenge is not demand but production. Like other chip designers, the Nvidia competitor must compete for limited capacity at TSMC’s factories in Taiwan. Copper Sky is hopeful that the chip maker will eventually find a solution to those constraints by producing chips at TSMC’s Arizona facility, though no timeline has been set.
Selby’s role on the board of the Arizona Commerce Authority, which recruits out-of-state businesses to set up manufacturing in the region, gives Copper Sky a unique angle. For startups like Etched, that access to manufacturing capacity may prove as valuable as the capital itself.
Frequently Asked Questions
What is Copper Sky Capital?
Copper Sky Capital is a Phoenix-based venture capital firm founded in 2021 by Jack Selby, formerly known as AZ-VC. It initially focused on startups in Arizona and the Southwest, and recently raised a $300 million second fund.
Why is Etched’s chip manufacturing a challenge?
Etched, like other chip designers, must compete for limited production capacity at TSMC’s factories in Taiwan. Scaling production is difficult because demand for advanced chip manufacturing far exceeds supply.
How does Jack Selby’s role in Arizona help startups?
Selby sits on the board of the Arizona Commerce Authority, which recruits out-of-state businesses to set up manufacturing in Arizona. This connectivity helps hardware startups like Etched explore reshoring chip fabrication to TSMC’s Arizona facility.
What is Etched’s valuation?
Etched is currently valued at $5 billion, making it one of the more valuable AI chip startups competing with Nvidia.
