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

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.

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.

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.

The Phase Law

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.

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. READ MORE

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.