To rebuild its industrial base at speed, the US government must abandon its typical strategy of funding many small players. Instead, it should identify and place huge bets on a handful of trusted, patriotic entrepreneurs, giving them the scale, offtake agreements, and backing necessary to compete globally.
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For projects requiring hundreds of millions, fundraising should be split into phases. The initial "pre-industrialization" phase, focused on proving technology, is suited for venture capital. Later phases for manufacturing and scaling should target project finance structures with debt/equity combinations and strategic partners.
The sectors within the "American Dynamism" thesis—defense, energy, space, manufacturing—are not siloed but form an interdependent system. Strong national security requires a resilient energy grid and space-based communications, which in turn depend on domestic manufacturing and critical minerals. This holistic view is crucial for both investors and policymakers.
The U.S. is shifting from industry supporter to active owner by taking direct equity stakes in firms like Intel and U.S. Steel. This move blurs the lines between free markets and state control, risking a system where political connections, not performance, determine success.
The most effective government role in innovation is to act as a catalyst for high-risk, foundational R&D (like DARPA creating the internet). Once a technology is viable, the government should step aside to allow private sector competition (like SpaceX) to drive down costs and accelerate progress.
To solve national security gaps without permanent state control, create a single, specialized, and temporary capital fund. It would be politically shielded, operate with a clear mandate to fill critical private sector gaps, and have a built-in expiration date to prevent it from becoming a permanent bureaucracy.
Instead of sending aid, the US could profit from global conflicts by becoming the primary manufacturer and seller of weapons. This approach would re-industrialize the nation, create high-paying jobs in the military-industrial complex, and generate revenue without direct military intervention or sending cash abroad.
The race to manage 40 million government-seeded 'Trump baby accounts' shows how a single policy decision can create a massive, winner-take-all market. This allows the government to act as a 'kingmaker,' anointing one or a few companies with a generational customer acquisition opportunity, similar to how the 401k launch benefited Fidelity and Vanguard.
China is explicitly subsidizing domestic semiconductor firms through its National Integrated Circuit Industry Investment Fund. This state-backed capital is the key driver behind its policy to achieve technological independence and replace foreign companies like NVIDIA.
When evaluating revolutionary ideas, traditional Total Addressable Market (TAM) analysis is useless. VCs should instead bet on founders with a "world-bending vision" capable of inducing a new market, not just capturing an existing one. Have the humility to admit you can't predict market size and instead back the visionary founder.
Instead of ineffective grants to incumbents, the US should leverage its world-leading capital markets. By providing lightweight government backstops for private bank loans—absorbing partial default risk—it can de-risk private investment and unlock the massive capital needed for new factories without distorting market incentives.