American Dynamism Investment Framework
Back technology companies that advance vital national capabilities
- Difficulty
- Advanced
- Time to result
- ~months to results
- Steps
- 6
- Confidence
- 97%
Start with a nationally important problem rather than a conventional venture category. Determine whether the company serves government, competes with it, operates under heavy regulation, or improves a capability used by citizens. Next, identify why technology can now alter the sector's economics, performance, or accessibility despite entrenched interests. Evaluate the founder's sector insight, willingness to endure a deeper J-curve, and ability to manage technical, capital, and procurement risk. Finally, test whether the market can produce an unusually durable company: scarce talent, physical infrastructure, customer proximity, and difficult execution may cause an early leader to attract expertise and compete mainly against legacy incumbents. The output is a conviction-based decision about whether the societal importance and potential scale justify the harder company-building path.
Origin
Katherine Boyle developed the thesis from her Washington background, research into technology companies already performing government functions, and Andreessen Horowitz's portfolio experience. Marc Andreessen's “It's Time to Build” essay helped crystallize it into a dedicated practice after COVID.
Core principles
- 01Target sectors that support the national interest or touch most citizens
- 02Look beyond conventional consumer and enterprise software categories
- 03Accept deeper J-curves when the potential market and civic value are large
- 04Use modern technology to challenge legacy incumbents and regulatory capture
- 05Treat difficult physical-world execution as a potential competitive moat
- 06Require a credible why-now driven by technology, talent, policy, or social change
How to run it
- 1
Define the national capability
Specify the essential capability the company supports, such as defense, manufacturing, education, housing, transportation, or infrastructure. Explain who benefits and why the problem matters beyond a niche market.
Pro tip Describe the capability independently of the startup's current product so the underlying need remains clear.
Watch out Do not label a company nationally important merely because it sells to a public agency.
- 2
Map the government relationship
Determine whether government is a customer, competitor, regulator, funder, or operational constraint. Trace how that relationship affects distribution, procurement, pricing, and adoption.
Pro tip Include indirect civic functions, such as improving public transportation or community safety.
Watch out Government dependence can create long sales cycles and regulatory exposure.
- 3
Find the technology leverage
Identify how software, automation, modern hardware, or a new operating model changes cost, speed, quality, or availability. Compare the proposed system with legacy practices and internal government development.
Pro tip Look for technologies already proven elsewhere that have not yet penetrated the target sector.
Watch out Adding software to an obsolete process may not create a genuinely better system.
- 4
Establish the why-now
Name the changes that make the company feasible now, including post-COVID behavior, distributed talent, falling startup costs, policy pressure, or technical maturity. Require evidence that timing has improved rather than merely assuming the market is large.
Pro tip Use different timing evidence for each sector instead of treating COVID as a universal explanation.
Watch out Being correct about a long-term need is insufficient if adoption remains decades away.
- 5
Underwrite the hard path
Assess technical risk, capital requirements, regulatory capture, procurement friction, and the likely depth of the J-curve. Decide whether the founder and financing plan can survive the difficult early years.
Pro tip Model milestones that retire specific risks instead of expecting software-style growth immediately.
Watch out Do not apply pure-software benchmarks to factories, aerospace systems, or regulated infrastructure.
- 6
Test durable scale
Evaluate whether scarce talent, accumulated infrastructure, customer trust, or operational learning can cause the leader to consolidate the market. Estimate the opportunity to become a platform or holding company rather than one of many interchangeable competitors.
Pro tip Ask whether ecosystem participants actively need the company to succeed.
Watch out A socially valuable mission does not automatically produce venture-scale economics.
In the wild
Chris Power first explored buying existing machine shops through a small private-equity fund. He concluded that retrofitting them with software was technically unworkable, returned the capital, and built automated shops from scratch. The company located near aerospace customers, combined automation with worker upskilling, and addressed a supply-chain capability that other hardware companies urgently needed.
→ Hadrian became Andreessen Horowitz's first formal American Dynamism investment and created a technology-led model for producing aerospace and defense parts.
Flock Safety built inexpensive license-plate-reading cameras in Atlanta and initially sold them to homeowners associations. As the network helped solve serious crimes, local news coverage generated demand and police chiefs began contacting the company. The product moved into government organically after proving its civic value in communities.
→ The company expanded into 30 states while demonstrating a path from local problem-solving to government adoption.
Boyle backed Anduril when defense investing was unpopular in San Francisco. The thesis was that changing threats would reveal the need for modern defense contractors built around current technology rather than institutions created a century earlier. Subsequent geopolitical events made that need more widely understood.
→ Anduril grew across multiple offices and allied markets as support for modern defense technology broadened.
Common mistakes
Confusing mission with investability
A company can address an important civic problem without possessing scalable economics, defensible technology, or a survivable financing plan. Evaluate commercial mechanics separately from moral importance.
Applying SaaS expectations
Physical and regulated companies may require more capital, technical validation, and time before their economics look attractive. Judging them solely by early software metrics can eliminate future category leaders.
Ignoring timing
Large neglected markets can remain resistant to change for decades. Identify the specific technical, cultural, talent, or policy shift that makes adoption plausible now.
Is it for you?
Best for
It is best for early-stage investors assessing ambitious companies in defense, manufacturing, transportation, education, housing, and infrastructure.
Not ideal for
It is not ideal for ordinary software companies without a meaningful connection to national capabilities, public systems, or the physical economy.
From the transcript
“So the most simple definition is it's companies that support the national interest.”
“Like these companies go deeper down the J-curve. They often don't look that good at Series A.”
“If we truly believe software is eating the world, which we do, this is like the last holdout and it's such a massive holdout, but…”
From the episode
American Dynamism (with Katherine Boyle)
Katherine Boyle