The Power Law—and Why It’s Handing the World to China

December 23, 2025

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by Jim Lane (Biofuels Digest) Why venture capital’s winning doctrine for software breaks at the factory gate—and why China’s phase-based approach is scaling the bioeconomy while the U.S. struggles.

Stand at the gate of the Shanghai Chemical Industry Park and the argument makes itself.

The scale is difficult to absorb all at once. Miles of pipe rack. Integrated utilities. On-site power. Trains queued for loading. Feedstocks arriving continuously, products leaving just as steadily. Capital measured not in rounds, but in concrete, steel, and decades. This is not a pilot. It is not a demonstration. It is a system built to endure.

By its very existence, it represents the quiet defeat of Western assumptions about how industrial leadership is regained. Not because Western science is weaker—it isn’t—but because the West spent a generation believing that ideas mattered more than systems, and that scale would somehow take care of itself once the breakthrough arrived.

China did not make that mistake.

It is worth remembering that this outcome was not foreordained.

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The Doctrine That Built Empires—and Graveyards

For two decades, venture capital has been governed by a single, enormously successful doctrine: the Power Law. Make many bets. Expect most to fail. Rely on a small number of outliers to return the fund.

In software, this doctrine built empires. In industrial biotechnology, it has built graveyards. The Power Law works when the world looks structurally the same at every scale—when what succeeds small can succeed large with little more than time and users. Code behaves that way. Mistakes are cheap. Iteration is fast. Failure is reversible.

Factories do not behave this way.

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Industrial biotechnology advances through distinct, unforgiving stages: lab, pilot, demo, commercial, global deployment. Each is a different system, governed by different physics, economics, and risks. What works in a flask can fail catastrophically in a fermenter. What looks elegant upstream can collapse downstream. What clears scientific review can become unfinanceable once steel and concrete are poured.

Yet for years, U.S. industrial biotech tried to scale as if it were software—spraying capital, celebrating pivots, stacking risk at precisely the moment when risk becomes lethal.

And while the United States kept betting on probability, China kept building systems.

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The Phase Law

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The Phase Law starts from a simple premise: scale is not continuous. Industrial ventures do not scale continuously. They advance through distinct, gated phases—lab, pilot, demo, commercial, and global deployment—and each phase is a different system with different physics, economics, risks, and financing needs.

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Power Law plays Texas Hold ’Em.

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Phase Law plays Go.

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First Bight: Practicing the Phase Law

This is where First Bight Ventures enters—not as a fund chasing fashion, but as a practitioner of the Phase Law.

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Led by founder and Managing Partner Veronica Breckenridge, First Bight begins where most venture stories end—not with the idea, but with the system required to make that idea endure.

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The playbook is explicit:

Operator DNA early. Plant builders, process engineers, downstream specialists, and supply-chain veterans are at the table from the start—not after the science is “done.”
Design for Manufacturability. Downstream processing, unit economics, and ten-year operating realities are addressed before large checks are written.
Milestones, not narratives. Progress is underwritten in risk retired at each phase, not in PowerPoint projections.
Equity efficiency. Expensive equity is reserved for early science and differentiation. Once technical and commercial risk has been engineered down, the heavy lifting — steel, concrete, and capacity — is financed with cheaper capital: project finance, debt, strategic balance-sheet money, and non-dilutive sources. This requires thinking like operators and project financiers, not pattern-matching from prior SaaS wins.

This is not asset-light thinking. It is system-correct thinking.

Not One Factory, a System

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Why the Outlook Is Brighter Than It Looks

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These are not moonshots launched in hope. They are slow builds toward inevitability.

The United States does not lack ideas. It lacks systems equal to them.

That is why the emergence of Phase-Law practitioners like First Bight matters. Across its portfolio, the pattern is visible: technologies chosen for real markets, scale pathways designed in advance, capital stacks aligned to physics rather than fashion. READ MORE

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NSCEB Assesses Future of U.S.-China Biotechnology Competition (Bergeson & Campbell)
New Analysis: Urgent Policy Action Needed to Maintain U.S. Global Leadership over China in Biotech Innovation (National Security Commission on Emerging Biotechnology)

Excerpt from Bergeson & Campbell: On December 19, 2025, the National Security Commission on Emerging Biotechnology (NSCEB) announced the publication of a paper entitled “The Future of U.S.-China Biotechnology Competition.” The paper notes that although the United States has historically led in biotechnology, over the past 20 years, China has systematically built a vertically integrated biotechnology ecosystem that is now in prime position to challenge U.S. leadership. According to the paper, China’s new competitive posture “is propelled by strategy and policies implemented on top of a foundation of non-market practices and brute force economics.” NSCEB states unless the United States “takes swift policy action, the Chinese Communist Party’s whole-of-nation approach to biotechnology will further undercut the U.S. industry, sending jobs, research and discovery, and opportunities for industry growth to China.” The paper continues NSCEB’s analysis of the U.S.-China competition in biotechnology, establishing “a new benchmark documenting the empirical evidence of China’s emerging lead, as well as the policy and investment mechanisms driving it.” READ MORE

Excerpt from National Security Commission on Emerging Biotechnology (NSCEB): In a new paper analyzing China’s rise in biotechnology, the NSCEB assesses that China is now surpassing the U.S. in certain areas of biopharmaceutical innovation, marking a new inflection point in this great power competition.

Washington, DC – Today (December 19, 2025), the National Security Commission on Emerging Biotechnology (NSCEB) released a new assessment of the state of the U.S.-China biotechnology competition. This is the latest in a series of new analyses following the publication of its major report and Action Plan for Congress in April 2025.

In April, the Commission came to a sobering conclusion: U.S. policymakers have a three-year window to retain, or in some cases regain, biotechnology leadership or risk ceding profound military, geopolitical, and economic advantages to China.

Since then, the trajectory the Commission identified has continued—and in several areas intensified. The NSCEB assesses that China is beginning to outpace the U.S. in certain domains of biopharmaceutical innovation, undermining our national and economic security, and global technological leadership.

According to the new analysis, unless the U.S. takes swift policy action, the Chinese Communist Party’s whole-of-nation approach to biotechnology will further undercut the U.S. industry, sending jobs, research and discovery, and opportunities for industry growth to China.

This new work continues the Commission’s analysis of the U.S.-China competition in biotechnology and establishes a new benchmark documenting the empirical evidence of China’s emerging lead, as well as the policy and investment mechanisms driving it.

Read the paper here.

“Emerging biotechnology will shape the balance of power in the decades ahead, and China is already acting on that reality with urgency and intent,” said NSCEB Chair Senator Todd Young. “The United States needs a clear strategy across the public and private sectors to ensure America – not Beijing – leads the future of biotechnology. We cannot afford to let China win this race.”

“Biotechnology is a strategic arena of geopolitical competition where the U.S. cannot afford to fall behind,” said NSCEB Vice Chair Michelle Rozo. “But that is the reality. Emerging evidence shows the CCP is leading in specific biopharmaceutical innovation, building on the advantages gained from non-market practices and brute force economics. The US needs a coordinated plan of action, or we risk ceding economic leadership and exposing national security vulnerabilities across health, agriculture, and defense.”

About NSCEB: The National Security Commission on Emerging Biotechnology is a time-limited, high-impact legislative branch advisory entity whose purpose is to advance and secure biotechnology, biomanufacturing, and associated technologies for U.S. national security and to prepare the United States for the bioindustrial revolution. The Commission published a comprehensive report in April 2025, including recommendations for action by Congress and the federal government. The bipartisan Commission is composed of Congressionally-appointed Commissioners with members from both the Senate and the House of Representatives as well as experts from industry, academia, and government. For more information about the Commission and to view the report, visit: biotech.senate.gov. READ MORE