- The defense tech industry is attracting more funding from venture capital investors.
- This recent wave is driven by investors’ techno-optimist patriotism and geopolitical tensions.
- From 2021 to 2023, defense tech startups secured double the funding they got from 2016 to 2020.
Defense technology and its coterie of investors were once a cottage industry within the enterprise software-driven venture capital world. But in recent years, that’s rapidly changing.
Investors and startups are no longer wary of the uncertainties of building technology with governments as the main target customers. Concerns about bureaucratic red tape, longer investment return timelines, and moral opposition to the overlap between tech and war have somewhat dissipated.
What has emerged is a techno-optimist patriotism among startup founders and investors alike, fueled by growing tensions and military technological gaps between the US and geopolitical archrivals Russia and China. The ongoing wars in Ukraine and Gaza have also spotlighted warfare and technologies from startups like Palantir and Anduril being used on the battlefield.
Secretive billionaires like Thomas Tull and established firms, including Andreessen Horowitz and Lux Capital, have core strategies behind funneling billions of dollars into the defense tech industry. From 2021 to 2023, defense tech startups got about $109 billion from investors, nearly double the amount companies in the space received from 2016 to 2020, according to PitchBook data.
