Observations: VC Priorities and Politics in 2025
Looking at this year's winter RFS from A16Z and YC, there's a clear pattern. Their priorities match presidential campaign topics exactly. Big topics affecting Americans are where they want to deploy capital. This alignment between VCs and politics is rare.
Contrasting Approaches to American Innovation
| Area | A16Z's American Dynamism | YC's Government Efficiency |
|---|---|---|
| Infrastructure Vision | Frontier tech requiring new regulations, space tech, defense | Administrative automation, form processing, document systems |
| Government Interaction | Seeking regulatory clearance for breakthrough tech | Optimizing existing government processes |
| AI Integration | Agent payment rails, personal data clouds, memory banks | Department automation, privacy-first architecture |
| Manufacturing Focus | New industrial capabilities, hard tech innovation | Supply chain repatriation, small business tools |
| Data & Privacy | Universal APIs for personal data, edge computing | Secure government systems, citizen data protection |
| Future of Work | AI companions, creator economy tools | Job transition platforms, service provider enablement |
The Data Sovereignty Trinity
Three non-negotiable requirements determine AI competitiveness:
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Privacy Laws & Regulation Modern AI development requires massive data collection and usage rights. Countries need frameworks that enable innovation while protecting citizens. China leads in data availability, the EU in protection frameworks, and the US sits uncomfortably in between.
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Compute & Energy Resources AI training demands extraordinary compute power and energy infrastructure. This includes data centers, edge computing networks, and sustainable power sources. China's state-backed infrastructure investment gives it a significant advantage.
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Local Talent & Models Success requires domestic AI companies, research institutions, and engineering talent. The US leads in research but faces competition in applied AI. Japan and China dominate in robotics and manufacturing AI.
The Human Element Paradox
The most surprising trend: as AI capabilities expand, human relationships become more critical. Three key observations:
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Enterprise AI Sales Complex AI solutions require face-to-face explanation and trust building. We're seeing a surge in high-touch sales roles, not their elimination. The more powerful the AI, the more human explanation it needs.
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Trust Building AI adoption in regulated industries depends on relationship networks. Companies need people who can explain capabilities, navigate compliance, and build trust through personal connections.
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Market Education The gap between AI capability and market understanding is growing. This creates demand for human intermediaries who can translate technical possibilities into business value.
Novel Implications
The convergence of VC priorities and political focus reveals several key trends:
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AI-Crypto Integration Stripe's move into stablecoins signals the future of AI agent payments. We'll need new financial infrastructure for autonomous systems to transact.
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Manufacturing Reality The US faces a serious automation gap compared to Asia. YC's focus on domestic production tools shows awareness of this critical weakness.
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Government Modernization Both firms see massive opportunity in government tech. This suggests public-private partnerships will drive the next wave of civic innovation.
Success in this environment requires mastering both technical capability and human connection. The winners will be those who can explain complex systems simply and build trust in person.
Edited by Anthropic's Claude Sonnet 3.5