Venture capital’s earlier skepticism toward defense technology has largely faded, as investors now pour billions into startups developing everything from autonomous drones to advanced cybersecurity tools.
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Despite the high capital intensity of hardware-focused defense startups, long timelines for returns, the complexities of working with the federal government, and the entrenched positions of defense giants like Lockheed Martin, Northrop Grumman, and General Dynamics, investors are actively stepping up with fresh funding.
The success of companies like Anduril and Palantir—both of which have managed to carve out significant space in a field long dominated by major contractors—has energized both founders and investors. Anduril, for instance, has secured major government contracts, while rising firms like Alexandr Wang’s Scale AI and Shield AI, which builds autonomous drones and AI-driven military software, are quickly gaining traction.
This momentum has only picked up recently, especially as the Trump administration expresses a desire to “revive” the U.S. defense industrial base by embracing “emerging technologies,” as Defense Secretary Pete Hegseth emphasized in his opening remarks during his nomination hearing.
According to a recent McKinsey report, global investors—ranging from top venture firms to solo capitalists—deployed $31 billion into defense-related startups in 2024, a 33% increase from the year before.
