Made In America: Announcing Our Investment In Eagle Electronics

Much has been made in recent years of the growing complexity surrounding U.S. - China relations writ large: their differing political agendas, starkly contrasting economic orientations and diverging roles internationally. One particularly thorny area of growing discussion has been bilateral trade. As the two largest national economies on earth - and historically the world’s largest trading partners - the trade policies of both nations have tacitly recognized the impracticability and economic risk associated with any form of abrupt decoupling, even as political relations have weakened significantly over time. This discussion is perhaps most complex and most salient as it relates to the U.S. import of critical technologies manufactured in China that rely on intellectual property built painstakingly over decades, and originally motivated in large part by the differential in total cost of production. Given relatively nascent domestic U.S. manufacturing capabilities and associated intellectual property in these domains, the practical, standalone ability of the U.S. to rebuild domestic manufacturing capacity at parity with best-of-breed Chinese firms is limited. At minimum, from a cold start such an effort would represent an enormously costly, multi-decade effort with significant economic pain in the interim.

Our latest investment, Eagle Electronics, seeks to solve precisely this issue. The company negotiates IP licensing agreements with Chinese electronics manufacturers to replicate their manufacturing capacity in the U.S. This solves the cold start problem by importing manufacturing expertise rather than direct components and thereby allows domestic control of all supply chain elements. From the perspective of North American end customers, Eagle represents a channel through which to source state-of-the-art electronics components from a trusted partner that does not face the difficult-to-bound tariff and access risks inherent in sourcing directly from Chinese producers. From the perspective of Chinese manufacturers, Eagle represents a mechanism to retain economic access to their largest export market in an increasingly uncertain trade climate. From our perspective at Asymmetric, Eagle represents an attractive solution to an increasingly pressing problem in the $500B+ China-to-U.S. import market (with electronic components accounting for 20%+ of total trade flows from China to the U.S. annually). The business has significant early momentum, with its first IP licensing agreement signed with Chinese firm Quectel, a slew of LOIs under negotiation with North American end customers (many of whom have viewed their reliance on Chinese supply chains as a board-level issue without adequate solution for many years), and its first manufacturing line in the process of being stood up - with Quectel’s direct assistance - in Ohio. We believe the economic logic for onshoring has strengthened even absent the current reality and looming threat of escalating tariffs; automation has reduced the historical wage rate arbitrage and by extension the total cost of production spread between manufacturing in China and the U.S. (and domestic supply chains are inherently more flexible, responsive and timely in delivery).

At Asymmetric, our early-stage investments are always a bet on the founding team as much as anything else. In that vein, we are thrilled to partner with Eagle’s co-founders Mark Kvamme and long-time friend of the firm TJ Dembinski, former colleagues at Drive Capital who were motivated in part to found Eagle through their successful experience investing in Finite State. We believe they have the expertise, network and ability to build a category champion that plays a primary role in enabling the onshoring and security of critical technologies right here in the United States. We look forward to sharing more updates on Eagle’s progress as the story continues to play out. You can read more about Eagle via Axios’s recent coverage here and its press release here.