Treasury Launches $5 Billion 'Independence Fund' for Tech Startups, Bypassing Key Oversight Laws

The new Independence Investment Fund Act establishes a $5 billion investment fund within the U.S. Treasury, structured to act like a government-backed venture capital firm. The core mission is to inject cash into U.S. companies developing “critical and emerging technologies”—think biotech, AI, and advanced manufacturing—specifically to counter the influence of “adversarial investment” from foreign entities of concern. The bill appropriates $5 billion for fiscal year 2025, with an overall investment ceiling of $25 billion outstanding at any time, and mandates that the entire fund must be liquidated after 10 years.

The National Security VC Fund

This isn't your typical government grant program. The Fund is designed to operate like a strategic venture capital (VC) firm, making equity and debt investments, with a strong preference for U.S.-headquartered tech companies. The goal is twofold: shore up U.S. tech independence and, importantly, “signal technology priorities to private investors to unlock more private capital” (Sec. 3(b)). They are explicitly prioritizing biotechnology investments from the jump, with $300 million of the initial funding earmarked for that sector. While the Fund can invest any amount, it will aim for an average investment between $1 million and $10 million, targeting seed to mid-stage companies. For a promising biotech startup, this could mean the difference between scaling up manufacturing here in the U.S. or having to take money from a foreign entity, which the government sees as a national security risk.

Who’s Running the Show, and How?

Managing this new capital pool falls to the Secretary of the Treasury, who must appoint a Chief Investment Officer and select an independent, experienced managing entity—either nonprofit or for-profit—through an open competition (Sec. 4). This managing entity will handle the day-to-day VC work. Oversight comes from a permanent, five-member Supervisory Board, which must approve all investment decisions. Crucially, the Secretary, in consultation with the Secretaries of Defense and Commerce, determines the overall strategy and technological priorities, ensuring the investments align with national security needs.

The Fine Print That Matters to Everyone

While the goal of protecting U.S. technology is solid, the bill includes some serious procedural shortcuts that should raise eyebrows. To staff this effort, the Secretary is authorized to hire up to 25 personnel and set their pay without following the standard federal competitive service hiring and classification rules (Sec. 5). This means they can recruit top VC talent quickly, but it also allows these positions to be filled outside the transparent, merit-based system that governs most federal jobs.

More significantly, Section 7 exempts the Fund’s actions and decisions from the Administrative Procedure Act (APA). The APA is the law that generally requires federal agencies to give the public notice and opportunity to comment on proposed rules and actions. By exempting the Fund, investment decisions—which could have massive market implications, favoring one company over another—can be made without public transparency or the usual legal checks and balances. For the public, this means there is less visibility and fewer avenues for challenging how $5 billion in taxpayer money is being strategically deployed in the tech sector. This lack of public oversight, even for a national security objective, is a substantial trade-off for the speed and flexibility the Fund gains.