A significant, under-the-radar shift has occurred in venture capital: the U.S. government is now a key partner and co-investor in early-stage deep tech. Firms like Voyager Ventures report that nearly half their portfolio companies have government deals, with entities like In-Q-Tel becoming frequent co-investors, marking a new era of public-private collaboration.
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To prevent promising startups from failing from funding gaps—the "Valley of Death"—the DoD actively "crowds capital" around them. This stack includes rapid R&D contracts, manufacturing grants, and low-cost loans from a $200B lending authority.
The "Genesis Mission" aims to use national labs' data and supercomputers for AI-driven science. This initiative marks a potential strategic shift away from the prevailing tech belief that breakthroughs like AGI will emerge exclusively from private corporations, reasserting a key role for government-led R&D in fundamental innovation.
An effectively managed sovereign wealth fund within the US government is making strategic and profitable investments in key technology companies like MP Materials and Intel. Spearheaded by entities within the DOD, this fund is cutting hard deals that benefit American taxpayers, suggesting a model for future public-private partnerships.
Leading AI companies, facing high operational costs and a lack of profitability, are turning to lucrative government and military contracts. This provides a stable revenue stream and de-risks their portfolios with government subsidies, despite previous ethical stances against military use.
OpenAI is lobbying the federal government to co-invest in its Stargate initiative, offering dedicated compute for public research. This positions OpenAI not just as a private company but as a key partner for national security and scientific advancement, following the big tech playbook of seeking large, foundational government contracts.
J.P. Morgan is launching a $1.5 trillion, 10-year initiative to invest in critical U.S. industries, including $10 billion in direct equity. This move signals a major shift for traditional finance, directly entering the venture capital space focused on national security, supply chains, and frontier tech.
A major shift in government procurement for space defense now favors startups. The need for rapid innovation in a newly contested space environment has moved the government from merely tolerating startups to actively seeking them out over traditional prime contractors.
Historically, the U.S. government has only taken equity in private firms during bailouts with the goal of exiting quickly. Recent deals with companies like Intel represent a new strategy of long-term investment to bolster specific industries, a marked departure from past policy.
Tech companies often use government and military contracts as a proving ground to refine complex technologies. This gives military personnel early access to tools, like Palantir a decade ago, long before they become mainstream in the corporate world.
The government is no longer just a regulator but is becoming a financial partner and stakeholder in the tech industry. Actions like taking a cut of specific chip sales represent a major "fork in the road," indicating a new era of public-private relationships where government actively participates in financial outcomes.
