Startups want a piece of US defence spending

12 venture capital and defence tech firms have written an open letter to US Secretary of Defense Lloyd Austin urging the US to open its military procurement procedures to smaller Silicon Valley defence ventures.

The collective says its aim is to transform an “antiquated” system into one that allows the US to retain its lead on the “technological battlefield”.

VC investment in the defence sector was already surging in recent years, but the Russo-Ukraine War hit the accelerator as startups worked with Ukraine to showcase their latest tech on the battlefield. For example:

  • Fortem has a drone that can shoot a net to disable enemy drones
  • BRINC has sent dozens of reconnaissance drones to Ukraine, and
  • HawkEye360 uses satellite clusters to detect Russian GPS jamming.

And many of these startups have top VC backing; early Facebook investor Andreessen Horowitz even launched a new fund with a defence focus.

Intrigue’s take: What a journey: Silicon Valley has partnered with US intelligence, then boycotted Pentagon projects, and declined to unlock a terrorist’s phone, before now telling the Pentagon it wants to be friends again.

This tricky relationship probably reflects the values at play here: sometimes there’s been tension between defending the US, and defending US civil liberties. But the way the world is going, many tech sector folks are now seeing more alignment between those two objectives.

And in the meantime, the trenches in Ukraine serve as a reminder of how much warfighting tech still hasn’t changed.

Also worth noting:

  • US investment in defence startups totalled $14.5B in the first quarter of 2023, compared to $8.3B raised by fintech startups.
  • Skydio, a startup producing drones in California, is backed by investors including Lockheed Martin, Andreessen Horowitz, Magic Johnson (not a typo), and Justin Timberlake (seriously).
  • US Defense Secretary Austin gave a speech in California in December, outlining some earlier responses to industry feedback.
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