- The defense technology industry is attracting more money from venture capital investors.
- This latest wave is driven by investor techno-optimist patriotism and geopolitical tensions.
- From 2021 to 2023, defense technology startups secured twice the funding they received from 2016 to 2020.
Defense technology and its fellow investors were once a cottage industry in the enterprise software-driven world of venture capital. But in recent years, that has been rapidly changing.
Investors and startups are no longer wary of the uncertainty of building technology with governments as the primary target customer. Concerns about bureaucratic red tape, long payback timelines, and moral objections to the overlap between technology and war have been somewhat alleviated.
What is emerging is a growing trend among startup founders and investors alike, spurred by rising tensions and military technology disparities between the United States and its biggest geopolitical rivals, Russia and China. It’s techno-optimistic patriotism. The ongoing wars in Ukraine and Gaza are also drawing attention to the technology and warfare from startups like Palantir and Anduril that are being used on the battlefield.
Secretive billionaires like Thomas Tull and established companies like Andreessen Horowitz and Lux ​​Capital have core strategies behind funneling billions of dollars into the defense technology industry. From 2021 to 2023, defense technology startups raised about $109 billion from investors, nearly double the amount companies in the sector received from 2016 to 2020, according to PitchBook data. It became.
