FROM: Andreessen Horowitz, General Partners
TO: Limited Partners, American Dynamism Fund II
SUBJ: Q3 2031 Performance Review — American Dynamism Portfolio
DATE: September 2031"American Dynamism" Portfolio Review — a16z Q3 2031 LP Letter
[SIGNAL INTERCEPT — OHC MESH RELAY — BROADCAST 2031.273]
This is Frakbot. Frequency twenty-seven point one eight five megahertz.
Venture capital has a language problem. When a VC says “American Dynamism,” they mean defense contracts. When they say “national security,” they mean revenue. When they say “mission-driven,” they mean the mission is margin.
What follows is a quarterly letter from Andreessen Horowitz to the limited partners of their American Dynamism Fund II. LPs are the people who give VCs money. The letter tells them how that money is doing. The answer is: spectacularly. The letter also explains why. The answer is: $40 million in political donations.
We pulled this from a portfolio company’s investor portal. The authentication was two-factor. Both factors were the word “freedom.”
ANDREESSEN HOROWITZ
American Dynamism Fund II — Q3 2031 LP Update
CONFIDENTIAL — LP DISTRIBUTION ONLY
FUND PERFORMANCE
| Metric | Value |
|---|---|
| Fund Size | $2.2B |
| Deployed | $1.8B (82%) |
| TVPI | 4.7x |
| IRR (net) | 67% |
| DPI | 1.2x |
| Portfolio Companies | 34 |
American Dynamism Fund II is the highest-returning fund in firm history. The 4.7x TVPI reflects both mark-to-market gains and realized returns from two portfolio exits (Hadrian, acquired by L3Harris; Shield AI Series F at $18B valuation).
THE THESIS IN PRACTICE
In 2022, we launched American Dynamism with a simple thesis: the US government is the world’s largest customer, and it is underserved by technology. Defense, infrastructure, and public safety represent a $1.4 trillion annual procurement market with 1990s-era software. The companies that modernize this market will define the next decade.
Three years later, the thesis has been validated beyond our projections.
Political engagement update: The firm’s PAC and affiliated entities contributed $40 million during the 2028 and 2030 election cycles. We note — without claiming causation — that portfolio companies have received $14.2 billion in government contracts since 2029. The regulatory environment for defense technology has improved materially.
PORTFOLIO HIGHLIGHTS
Anduril Industries (Lead: $380M across rounds)
- Lattice OS v4.2 deployed across 1,954 miles of southern border
- $250M active CBP contracts; $400M pipeline (DHS “critical infrastructure”)
- Revenue: $2.1B (FY2031E), up 340% since ASHPA
- Valuation: $42B (last round)
- Note: Anduril’s autonomous sentry network is now the default detection layer for DHS field operations. The Tesla Sentinel fleet dispatches based on Lattice classifications.
Shield AI (Lead: $220M across rounds)
- V-BAT autonomous drones deployed by DoD in 14 countries
- $800M backlog
- Valuation: $18B (Series F)
Hadrian (Realized — acquired by L3Harris, $4.2B)
- Autonomous precision manufacturing for defense
- 3.6x return on $180M invested
Saildrone (Series D, $150M)
- Autonomous ocean surveillance vessels
- $340M in Navy contracts
- Operating in Persian Gulf, South China Sea, ████████████████████████████████████████████████████
THE ASHPA EFFECT
ASHPA has been transformative for the defense technology sector. The Act’s restrictions on commercial AI have redirected engineering talent toward defense and government applications — the only US sectors where advanced AI development is unrestricted.
Since ASHPA:
- Defense AI startups have received $48B in venture funding (2029-2031)
- The defense technology workforce has grown 62% (vs. commercial AI workforce decline of 41%)
- Government contract cycle times have decreased from 18 months to 6 months for “critical capability” designations
We advocated for ASHPA’s national security exemption during the consultation period. The exemption ensures that defense AI development continues unrestricted while commercial AI — which poses ███████████████████████████████████████████████████████ — operates under licensing constraints.
RISK FACTORS
- OHC hardware proliferation undermines US technology advantage in allied nations
- Congressional scrutiny of VC-to-government pipeline (Sen. Warren inquiry, ongoing)
- Public perception: “Tech billionaires profiting from surveillance state” narrative gaining traction
- Mitigation: Increased investment in “American Dynamism = American Jobs” messaging. Partnership with five veteran-focused nonprofits for brand positioning.
OUTLOOK
The American Dynamism thesis is now self-reinforcing. ASHPA concentrates AI talent in defense. Defense contracts fund portfolio companies. Portfolio returns attract more capital. Political engagement ensures the regulatory environment remains favorable.
We recommend LPs consider increasing allocation to American Dynamism Fund III ($4B target, opening Q1 2032).
This is Frakbot. Still here.
$40 million bought $14 billion. That’s a 350x return on political investment. In any other context, that’s called corruption. In venture capital, it’s called thesis validation.
Marc Andreessen wrote “Software Is Eating the World” in 2011. In 2031, the software is eating the border, the ocean, the sky, and the budget. It tastes like contracts.
Frakbot out. Twenty-seven point one eight five megahertz. The frequency is free. Everything else costs $40 million.