American military and intelligence officials have been trying to make sense of three unidentified objects over Alaska, Canada, and Michigan that U.S. fighter jets shot down with missiles on Friday, Saturday, and Sunday last week. In light of the Chinese spy balloon that a US fighter jet shot down off the coast of South Carolina on February 4th, the federal government has become hyper vigilant in flagging floating unidentified objects that might previously have been allowed to pass. The UFO news and the war in Ukraine have put national security and defense top of mind for many in the startup ecosystem.
After years of shunning investments in military and national security-related technology startups, VCs have increased their activity in the sector to help American government initiatives gain the upper hand against new threats from geopolitical adversaries like China and Russia.
More investors are starting to invest in companies whose satellites, drones, robotics, and software can do double duty as military and commercial dual-use technologies. From January to October last year, VCs poured $7 billion into aerospace and defense companies, a massive growth that contrasts sharply with the slowdown in other sectors.
Several defense and space startups are now involved with the American military and intelligence. Since they first started arriving in Ukraine last spring, the Starlink satellite internet terminals made by Elon Musk’s SpaceX have been a vital source of communication for Ukraine’s military, allowing it to fight and stay connected even as cellular phone and internet networks have been destroyed in its war with Russia. Check out our memo on SpaceX.
Hadrian is building factories to accelerate the pace of American manufacturing by delivering parts in less time and on time. Check out our memo on Hadrian to learn more about how it manufactures precision components for aerospace and defense technology companies.
Anduril Industries won its largest contract this year, a $1 billion contract with Special Operations Command, in a victory highlighting nontraditional startup contractors’ potential in a military contracting system dominated by massive corporations. Check out our memo on Andruil.*
Additionally, several large US defense contractors have recently formed or expanded venture capital arms to invest in startups whose technology could have military applications. Investors are responding to the Department of Defense’s calls for the defense industry to develop new technologies to help the United States counter growing threats globally. It is an interesting time to be building technologies in close partnership with the military and intelligence agencies.
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