Underwriting Policy Risk: How Export Controls Move Valuations

22 October 2025 - A Weekly Publication by New North Ventures

U.S. export controls now link AI chip sales to revenue sharing. Companies developing technologies at the intersection of commercial and defense applications must interpret controls that combine national security, industrial policy, and market leverage in ways unseen in prior regulatory cycles. These shifts are creating new patterns - and opportunities - for investors and founders.

U.S. export controls have evolved into a strategic lever shaping investment and market dynamics. Licensing decisions tied to revenue, combined with China’s reciprocal Unreliable Entities List, are transforming the ecosystem into a space where regulatory moves ripple across valuations, funding rounds, and competitive positioning. Investors are recalibrating assumptions about market size, timing, and risk allocation as policy unpredictability becomes a priced factor. Founders targeting defense-adjacent technologies are adjusting capital strategies, prioritizing flexibility and forward visibility. What once existed to prevent technology proliferation now intersects industrial policy, trade negotiation, and financial incentives, creating an environment where regulatory insight is as critical as technical differentiation.

The broad shift in export control strategy is altering how capital evaluates frontier technology. Observing which regulatory levers are used, how counterparts respond, and when policies shift provides early indicators of market tension and investment risk. Investors are incorporating these signals into valuation models, funding cadence, and competitive analysis. Founders and capital allocators alike are learning that understanding regulatory intent and timing is as consequential as technology execution when pursuing growth in sensitive technology sectors.

Leveraging Contingent Capital as a Non- Traditional Discipline of Economic Warfare

A Joint Special Operations University report by Matthew Flug and Thomas Johansmeyer introduces “insurfare” as a new discipline of economic warfare for competing in the Global South. The authors contend that traditional approaches to influence have proven insufficient against adversaries like Russia and China, who provide economic support with fewer political strings attached. The result is a strategic challenge where the U.S. faces a substantial influence deficit among the 6.3 billion people living outside liberal democracies.

The proposed solution leverages parametric insurance as a proactive tool rather than reactive aid. As a means of capacity building, the US Special Operations Forces would establish insurance policies in vulnerable regions that automatically disburse funds when predetermined triggers occur. An earthquake exceeds a specific magnitude or crop yields fall below defined thresholds, and commercial insurers immediately release capital to affected populations. Because the U.S. only pays premiums rather than full relief costs, the approach delivers outsized impact from modest investment while bypassing the delays and corruption that often undermine traditional aid.

Flug and Johansmeyer argue this transforms economic security from defensive posture into offensive capability. Pre-positioned financial protection demonstrates U.S. commitment before disasters strike, while rapid post-event payouts deny adversaries the opportunity to exploit economic desperation through influence campaigns that create asymmetric advantage. The framework positions insurance as an irregular warfare tool suited for an era of strategic competition where economic resilience increasingly determines geopolitical alignment in contested regions.

More links to explore:

• The End of Cybersecurity

• Power Moves: How China’s Energy Investments Provide Durable Influence in South America

Thank you to everyone who joined us for the NNV Emerging Tech Showcase featuring three companies building the infrastructure layer for the next generation of space commerce. Auriga Space, a New North Ventures portfolio company, presented alongside ThinkOrbital and bluShift Aerospace, showcasing operational technology with NASA and DoD validation. These teams are developing critical capabilities that will enable the commercial space economy, and we’re grateful to our community of investors, founders, innovators and space technology enthusiasts for engaging with their work.

---

In this episode of Securing Our Future, host Jeremy Hitchock sits down with Sharon Weinberger, National Security and Foreign Policy Editor at The Wall Street Journal and author of “The Imagineers of War: The Untold Story DARPA, the Pentagon Agency that Changed the World.” Sharon shares her professional journey and insights on DARPA—a key player in technological advancements for national security. From DARPA’s role in developing the internet and stealth aircraft to its controversial projects like the Vietnam-era ‘Hafnium Bomb,’ Sharon delves into how DARPA’s missions have evolved over time. She also discusses the challenges of balancing high-risk projects with tangible payoffs and how DARPA can continue to stay relevant amidst growing private sector innovation. Listen in as we explore the future of national security innovation and the lessons learned from DARPA’s storied history.

Thanks for reading Securing Our Future! Subscribe for free to receive new posts and support my work.