Interview, Fireside Chat
How Marc Andreessen, Ben Horowitz, & David Ulevitch Started a16z’s American Dynamism Fund
Sourcery with Molly O'SheaMarc Andreessen, Ben Horowitz, David Ulevitch, Katherine Boyle, Molly O'Shea
- David Yulevich joined Andreessen Horowitz (a16z) in 2018 following a pitch that he could "do whatever he wanted" within the firm.
- Yulevich met with Palmer Luckey and the Anduril team in 2019; Anduril was described as unapologetically focused on building the "next great defense prime."
- A16z faced internal skepticism regarding defense investments, particularly following Google's 2018 withdrawal from Project Maven amid employee protests against government AI contracts.
- Mark Andreessen and Ben Horowitz have a historical precedent for supporting national security infrastructure, including pioneering SSL encryption technology during their Netscape era.
- The American Dynamism Practice was officially launched in early 2022, initially funded by borrowing venture dollars before securing dedicated capital.
- The first American Dynamism Fund was raised at $660 million, with plans for a second fund imminent.
- JP Morgan announced a commitment of $1.5 trillion toward "dynamism" related categories, signaling broad institutional recognition of the need to invest in domestic defense and industrial capacity.
- The strategy leverages a convergence of supply-side technological shifts (AI, computer vision, low-cost commodity hardware) and demand-side government needs (supply chain resilience, modernized procurement).
- Yulevich argues private capital offers a superior model to government R&D funding by removing the "burdensome overhead" of auditing and accounting required for taxpayer-funded grants.
- The firm's proposed defense reform strategy includes replacing rigid, product-specific appropriations with outcome-based funding that allows the government to purchase finished solutions.
- A16z advocates for replacing "past performance" requirements in government contracting with bake-offs and competitions to enable startups to compete with legacy incumbents.
- Structural policy work is being conducted in Washington, D.C., to address bottlenecks in defense procurement, the appropriations process, and the selection of talent.
- Investment thesis focuses on categories including defense, space, public safety, energy, and manufacturing, driven by the need to reduce reliance on Chinese supply chains for critical materials like steel and battery components.
- AI is identified as a primary accelerator across the portfolio, transforming energy demands for compute, autonomous drone swarms, and logistics optimization via FAA modernization.
- Specific portfolio examples include Anduril's "Eagle Eye" body-worn headset, Flock Safety's AI-driven license plate recognition for public safety, and Airspace Intelligence's automated flight planning.
- Exit confidence is rising as companies like SpaceX demonstrate that defense and industrial startups can achieve transformative scale without immediate public offerings.
- The firm views the revitalization of domestic defense and industrial capacity as foundational to the survival of the broader U.S. economy and democratic stability.