Why a16z Launched the Machine Age Fund | Jen Kha

**Theo Jaffee** (0:00)
South Korea, by the way, just announced that they're giving premium AI to every citizen as sort of a public utility thing. So, very, very topical.

**Jen Kha** (0:09)
But by the way, it's not just them, it's El Salvador. They implemented GROK in their schools, for example, for free, and they're utilizing AI doctors, for example. And you see these different examples around the world where they're accelerating their AI development and adoption way faster than in the US. And we might also see the influx of a lot of this data center supply chain bill that happened overseas because of this sentiment in the US as well.

**SPEAKER_3** (0:36)
For decades, venture capital moved further and further away from hardware. AI is pulling it back. Jen Kha, managing partner and head of global partnerships at the A16z, joins Theo Jaffee and Sophia Dew on NTS to discuss A16z's Machine Age Fund and why the physical infrastructure underneath AI is suddenly one of the most active areas for founders. They get into why the existing stack wasn't designed for today's AI work loads, what needs to change across chips, networking, memory, cooling and data centers, and why hardware has gone from a tiny fraction of the pitch's A16zs to more than 20%.
Jen also explains why this infrastructure race is increasingly global, how governments and institutional investors are thinking about AI as a national priority, and why as she puts it, what's old is new again.

**Sophia Dew** (1:30)
Hello everyone and welcome back to MTS. Andreessen Horowitz just launched a new $1.1 billion Machine Age Fund, focused on the physical infrastructure underneath AI, from chips and networking to data centers, robotics and energy. Joining us today is Jen Kha, who's a managing partner and head of global partnerships at A16Z to talk about the Machine Age Fund and the investment thesis behind it. Jen, welcome to MTS.

**Jen Kha** (1:56)
Hello. Hello. It's good to be here.

**Sophia Dew** (1:58)
Great to have you here. I know Theo just said a big woo, but it's pretty exciting and we wanted to talk about why this Machine Age Fund, why now?

**Jen Kha** (2:07)
For sure. By the way, the classic adage is sell in May and go away. This has been the most prolific summer.
The fact that we're announcing a fund on August 28th, typically, Wall Street is dead, is like a classic sign of where we are in the cycle and the time, which is just there's so much going on. But we announced this $1.1 billion Machine Age Fund to invest into all of the physical constructs of the world that is now so bottlenecked given all the demands in AI. Think about it as everything below the software stack. We've got our Infra Fund, which invests into products for developers. We've got our Apps Fund, which sells into business to business and business to consumer. This is below all that. All the physical parts of enabling AI, from data centers to chips, to custom silicon, networking, Raxes, all the stuff in the physical world that was honestly largely an uninvestable category for the most part, for the last 30 years, because we kind of built that infrastructure out for the last era of the internet, and then of course of SaaS. That's all now getting rebuilt because AI is way more mathematically intensive and compute intensive, and all that infrastructure, sort of the poor man's version that we're limping along with today, needs to be repurposed for the AI age going forward.

**Theo Jaffee** (3:25)
Why a separate vehicle rather than doing this investment through the main growth, infra and other funds?

**Jen Kha** (3:33)
Our view is, our job is to follow the entrepreneurs.
My partner Chris Dixon calls it following the nerd energy. What is the nerd doing on nights and weekends is probably what us normies will be doing in the future.
Oftentimes, entrepreneurs are that early signal into that. The reason why we decided to establish a separate fund is, one, there's just a groundswell of opportunity. We went from, Mark had famously said, software is eating the world. Turns out AI has solved software. Any software need you have today, AI can actually do it, but we have to solve for all the physical constraints in order for AI to actually solve for software. And so by creating a separate fund, we're putting out the back signal to the world, to entrepreneurs who are building, to spend time with us, first and foremost. Second of all, just from an organizational perspective, it's very helpful to have a dedicated pool vehicle for these type of investments. Because if you think about, when these companies typically raise capital, they will raise quite a bit of capital to kind of get off the ground. And typically, what happens is if you put a like for like against another, let's just say, infra deal or apps deal, for example, there's so much in the way of investment you have to do ahead of time that if you do the like for like, you're almost always going to bias towards that sure thing with infra, what it's doing, you know, a billion, two billion in revenue like off the bat and off the cuff. And so by separating it into a fund, we're kind of staking in the ground, A, our commitment to the space, and then more importantly, B, from an organizational portfolio construction perspective, that the intention of this is to capture those winners at the earliest stages, maximize ownership. And then when you have that $75 million check that you're going life for life, you have that dedicated pool of capital to really pursue after that category.