OPINION:
The United States stands at a pivotal moment in history. Facing unprecedented challenges from global competitors like China, especially in critical sectors such as rare earth minerals, quantum computing, space exploration, semiconductors and artificial intelligence, America must act decisively.
The structural misalignments between private capital markets and the nation’s long-term strategic needs have created a perilous gap. To bridge this gap, the U.S. must establish a new kind of sovereign technology fund and agency — funded not by individual taxpayers but by corporations and designed to invest in the nation’s future technologies and infrastructure. As our public equity quarterly profit cycle has increasingly been vilified for being too short-term-fixated, our private market is ill-equipped for the lengthier and more costly tasks demanded in supply chain cleansing, space advancement, and reconstituting and safeguarding our rare earth minerals supply.
Structural misalignment of private capital
For background, private equity and venture capital firms in the U.S. operate on investment cycles driven by limited partner agreements, typically with five-year investment periods and expectations of returns within seven to 10 years. This model is ill-suited for industries like rare earth minerals and quantum computing, where payback periods can extend over decades. According to PitchBook data, most private equity firms return profits within 2½ years, a timeline incompatible with long-term strategic projects.
Underfunded pensions and the infeasibility of traditional funding models
Despite President Trump’s recent pronouncement and interest in creating a national sovereign wealth fund, there are uniquely American challenges in simply conjuring such a fund in the likeness of other countries owing to decades of profligate government spending, culminating in the unsustainable account deficit. While continuing to increase it is an option, it is a bad one. A fresh approach is needed.
U.S. pensions are collectively underfunded by an estimated $1.3 trillion, making them unreliable sources for an American sovereign wealth fund. According to the Congressional Budget Office, the Social Security Trust Fund is also projected to be depleted by 2035. Models like the Alaska Permanent Fund, which leverages oil revenue to pay annual dividends to residents, are not scalable at the federal level because of the absence of similar surplus revenue and the state ownership of such assets. Thus, an innovative new approach is necessary.
A new funding model
We imagine a futurist hybrid fund, alongside an agency, seeding the future via a uniquely different process, specifically, absent new individual taxes — or taxes at all — by installing corporate funding. Yet this is not a mere contribution; it is lending combined with savings from other programs. Corporations would lend profits into the fund and receive a reciprocal pro rata of the total fund, effectively lending money to a higher risk, higher reward initiative that bolsters national security and technological advancement. This model appeals to both sides of the political aisle. Republicans appreciate the focus on national security and critical technologies, and Democrats value leveraging big business to strengthen the nation without burdening individual taxpayers.
To further bolster the corporate element, we fuse a corporate accountability element with a recapture process from the profligate funding — and inordinate waste — by the international quasi-governmental bureaucratic bodies that are charitably considered useful yet incapable of meeting a moment of threats to democracy. Thus, this entity will be led by funding from America’s corporations but will be backfilled with the large amount of international funding that has gone awry. If these organizations fail to fulfill their missions effectively, the U.S. could reduce funding and reallocate those resources to the sovereign technology fund. The U.S. contributed more than $18 billion to the United Nations system in 2022, one-third of total funding. Even a 10% reallocation could inject $1 billion into critical domestic (or allied countries) investments.
Ensuring bipartisan support and economic security
This fund would be structured as a lending arrangement, where corporations contribute to the fund and capitalize the investment over time, receiving repayments of capital plus interest when the fund’s investments mature and generate returns — plus the shared upside of the model. It aligns corporate and national interests, fostering a cooperative approach to securing America’s future. By investing in sectors like rare earth minerals, where China controls approximately 80% of the global market, we reduce dependency on foreign powers.
Governance and oversight: A public-private partnership
To prevent politicization and ensure effective management, the fund would be overseen by an independent organization — a model like that of the Presidio Trust overseeing the former military base in San Francisco, which is appointed by the president and confirmed by Congress, with a board of corporate executives, economists, leading technology researchers from universities, and futurists.
Addressing the misalignment of investment horizons
The proposed Sovereign Tech Fund addresses the critical issue of investment horizons. Private investors are constrained by the need for quick returns, but strategic industries require patience and long-term commitment. By accepting longer payback periods, the fund can invest in transformative projects that private capital overlooks. This approach is essential for regaining leadership in semiconductors — a $550 billion global industry — as well as advancing in space exploration and artificial intelligence.
Safeguarding America’s economic leadership
The board would maintain quarterly meetings with private sector leaders — similar to the collaborative approach of companies like Anthropic and OpenAI with the government — the office would stay abreast of technological advancements and adjust strategies accordingly.
Establishing a U.S. sovereign technology fund helps secure the U.S. as an indispensable economic power and technological leader by replacing the investment gap in private markets, ensuring the nation’s strategic priorities are insulated from short-term market pressures and political cycles in a bold yet necessary step.
• Andrew King is managing partner at Bastille Ventures, investing in critical technology furthering national security, and founder of the bipartisan nonprofit Future Union, working with the private sector to combat state espionage. He advises Congress, the House Select Committee on China, the Treasury Department, the Department of Commerce and the White House. He is a former general counsel of the Dallas Stars NHL team and a corporate lawyer and investment banker.
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