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- The defense tech startup industry is attracting more funding from venture capital investors.
- This recent wave is driven by investors’ techno-optimist patriotism and geopolitical tensions.
- Funding to defense-related companies went up 33% in 2024 year-over-year, according to McKinsey.
Venture capital’s once-skeptical stance on defense technology has all but disappeared as investors pour billions into startups building everything from autonomous drones to cybersecurity tools.
Investors have lined up to deploy fresh cash despite the high capital demands of hardware defense startups, extended horizons for returns, the complexities of working with the federal government, and the difficulty of encroaching on turf dominated by prime defense companies like Lockheed Martin, Northrup Grumman, and General Dynamics.
With the success of defense companies like Anduril and Palantir, which have been able to break into that already crowded field and make a name for themselves, investors and startup founders alike are invigorated to build more in defense tech. Anduril has been able to land big contracts from the government, as well as newer players like Alexandr Wang’s Scale AI and Shield AI, a maker of autonomous drones and AI-powered software for the military.
This trend has only accelerated in recent months, as the Trump administration has signaled an interest in “reviving” the defense industrial base by leveraging “emerging technologies,” as Defense Secretary Pete Hegseth said in his nomination hearing opening statement.
Globally, investors at established venture firms and those working as solo capitalists deployed $31 billion to defense-related companies in 2024, up 33% from the previous year, according to a recent McKinsey report.
Here are the venture capitalists doubling down on defense tech:
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