WASHINGTON — For a long time, most main US tech corporations and traders steered away from the Pentagon.
Some have been turned off by the labyrinth of contracting guidelines that left most enterprise within the arms of giants like Lockheed Martin and RTX. Others balked on the moral questions of constructing weapons and surveillance programs.
But Russia’s full-scale invasion of Ukraine, the battle between Israel and Hamas, and China’s speedy army rise have modified that calculus.
Gone is the resistance that Google confronted in 2018 when it let the Pentagon use its rising synthetic intelligence to investigate drone footage for goal identification, the choice set off a storm contained in the Silicon Valley large. Employee protests compelled administration to retreat from the deal.
The backlash, pushed by a vocal minority inside Google, mirrored a broader unease amongst some tech staff about their improvements being harnessed for deadly or ethically questionable army makes use of.
That resistance has largely melted away, giving solution to enterprise capitalists who’re pouring billions into protection tech startups, whereas engineers are leaving a few of America’s greatest corporations to construct the subsequent era of battlefield weapons.
“Every firm I discuss to needs to be sure that if there’s something they’ll do, they’re doing it,” Emil Michael, the Pentagon’s undersecretary for analysis and engineering, informed a Washington protection know-how convention final month, noting that the times when Silicon Valley shunned army work “are fully over.”
The rewards are clear. The Trump administration is taking a look at a $1 trillion protection finances.
OpenAI, the San Francisco-based synthetic intelligence firm signed a $200 million protection contract in June, its first formal contract ever with the Pentagon. The earlier month, Meta introduced it was teaming up with Anduril to construct prolonged actuality (XR) units for the US army.
The developments have sparked engineers and traders to channel their expertise and cash into dual-use applied sciences that may serve each industrial and army functions.
Some analysts say that in some methods, Silicon Valley is returning to its roots.
Long earlier than it turned a hub for client apps and smartphones, the area grew out of Cold War-era federal investments in electronics, semiconductors, and computing.
“We have seen an actual sea change,” stated Raj Shah, a former Air Force pilot who led the Pentagon’s first Defense Innovation Unit and now co-runs Shield Capital, a enterprise fund centered on protection startups.
“Smart engineers are saying, ‘I see what’s taking place in Israel, I see what’s taking place in Ukraine, and I can’t take our lifestyle without any consideration. Instead of constructing a photo-sharing app, I’m going to construct one thing that helps protect this peace.’”
Money Flows
Venture capital, personal fairness corporations, and different tech corporations poured greater than $28 billion into the sector within the first half of 2025, already surpassing most up-to-date full-year totals. By comparability, simply $18 billion flowed into protection tech in all of 2019, in response to PitchBook.
The funding surge spans autonomous programs, robotics, software program, cybersecurity, new supplies, house tech, biotech, quantum computing and power storage.
Rising protection budgets overseas are serving to.
NATO allies agreed in June to spice up army spending to five p.c of GDP, with 3.5 p.c for core protection and 1.5 p.c for associated areas reminiscent of cybersecurity and the protection industrial base. Streamlined procurement procedures are additionally making it simpler for startups to compete.
Still, breaking into the Pentagon stays one of many hardest challenges in enterprise. Even SpaceX and Palantir — two of probably the most profitable protection entrants in a long time — needed to sue the Defense Department to win contracts.
Credentials are required simply to get in, and every of the eight procurement facilities within the Pentagon has totally different guidelines, budgets, and timelines. Civilian-friendly follow-ups are uncommon, and job titles are sometimes indecipherable.
“Defense is just not like different markets. Having one of the best know-how will solely get you thus far. Success additionally hinges on understanding how the federal government buys, who the decision-makers are, and easy methods to align with long-term applications of file,” Point72 Ventures, a agency owned by billionaire investor Steve Cohen and that’s centered on protection startups, stated just lately.
Matthew Steckman, president and chief enterprise officer at Anduril, one of many largest protection tech startups by market capitalization, stated the Pentagon is streamlining the way in which it procures weapons, however startups nonetheless wrestle to land massive orders that permit them to scale.
“If I need to change into an everlasting functionality, and even an everlasting public firm – which is the ambition of loads of enterprise capitalist funded corporations – I’ve to determine a solution to leap throughout these small swimming pools of funding into mainline budgets,” he informed RFE/RL.
Last 12 months, the Pentagon spent about $2 billion on merchandise from protection startups – a sliver of its $850 billion finances, in accordance to the Silicon Valley Defense Group, a nonprofit set as much as bridge relations between the tech neighborhood and the Pentagon.
The change in investor attitudes towards the protection business comes at a time when analysts are warning the US industrial base is just not ready for a drawn-out battle like Ukraine’s, the place tens of 1000’s of drones, for instance, are launched every month.
For a long time, they are saying, the US has prioritized high-cost, extremely subtle programs just like the F-35 fighter and Patriot missiles — platforms troublesome to provide shortly or in giant numbers.
“In the brand new physics of the battlefield, in the event you can’t produce, you lose. And each struggle recreation principally says that,” Steckman stated.
Dialing again excessive efficiency necessities, he added, can yield “huge good points on manufacturing.”
Anduril’s Barracuda-M cruise missiles, for instance, require simply 10 instruments to construct, permitting speedy scale-up.
Many startups are additionally pursuing modular designs, making it simpler to swap out components or software program as battle situations evolve. It’s a mannequin borrowed from industrial giants like Apple and Tesla.
Flush with enterprise capital, startups are additionally accelerating growth and prototyping, sidestepping the federal government’s conventional decade-long acquisition cycles.
Anduril used personal funding to design and discipline the Roadrunner — a reusable vertical takeoff plane — in simply two years. The Pentagon rewarded that effort with a $250 million contract for 500 Roadrunners, that are able to intercepting airborne threats.
Michael, the Pentagon analysis chief, stated he needs extra corporations to faucet their very own capital for growing revolutionary programs.
“The authorities can’t take all the chance on dangerous initiatives. When there’s extra shared danger, that can result in pace, that can result in innovation,” he stated.
