Artificial intelligence Politics and regulation Startups Venture

Inside The US Military And Defense Sectors: The VC-Backed Companies Getting Jobs And The Big Contractors Funding Startups

Illustration of a flying car.

At over $770 billion for this fiscal year, the U.S. defense budget is nothing if not enormous. And considering a majority goes to private contractors, there’s no shortage of companies vying for a piece.

Historically, however, venture-backed startups haven’t been huge players in this space. While some include defense among industries they serve, few form with the military as their core customer. Likewise, few venture firms cite military and defense as a focus area.

Search less. Close more.

Grow your revenue with all-in-one prospecting solutions powered by the leader in private-company data.

That said, the U.S. startup space is vast and varied enough that the activities of even a small portion of funded startups can translate into some pretty big numbers and intriguing trends. This is the case for defense, where upstarts developing technologies from electric aircraft to space fueling stations to AI-enabled analytics are securing partnerships or capital from the military and major defense contractors.

Where big defense contractors are investing

Defense contractors aren’t major venture investors, but they do partake in some startup financings.

Over the past couple years, per Crunchbase data, the five largest U.S. contractors have backed over 30 known rounds. Of the group, the most active looks to be Lockheed Martin, which invests primarily out of its VC arm, Lockheed Martin Ventures.

Among recent investments, top sectors of interest include drone technology, AI-enabled tools for mapping, analysis and tracking, and the aforementioned electric aircraft. We’ve put together a list of 33 companies that received funding in contractor-backed rounds since last year.


Standouts include:

  • Wisk Aero, a Silicon Valley-based developer of self-flying electric air taxis, raised $450 million in January from Boeing. (Of course, Boeing operates as both a commercial aerospace technology company and a military contractor. Wisk’s technology to date has been primarily promoted for travel, though it may have military applications as well.)
  • Epirus, a startup competing to supply what it describes as “drone-zapping weapons” to the U.S. military, raised $200 million in a February Series C round at a valuation of $1.35 billion. T. Rowe Price led the financing, but the list of participating investors was long and included General Dynamics Land Systems.
  • Slingshot Aerospace, a developer of technology to help satellite operators navigate space traffic, raised $25 million this month in the second tranche of its Series A round. The company, which counts Lockheed Martin Ventures as one its backers, includes the U.S. Air Force and NASA among its customers.

Unicorns and recently public VC-funded companies with defense ties

Venture-backed companies have also secured some sizable military contracts. Prominent names include a mix of still-private unicorns as well as funded companies that have gone public in recent quarters.

Probably the best known is SpaceX, the nation’s most valuable private, venture-backed company, which has been piling up contracts with the U.S. military. Two more recent contracts come from the Air Force: $102 million awarded this year to demonstrate technologies for transporting military cargo and aid on a heavy rocket, and $160 million last year to launch two of its Falcon 9 rockets.

Search less. Close more.

Grow your revenue with all-in-one prospecting solutions powered by the leader in private-company data.

Palantir, a longtime unicorn that went public in 2020, is another big name with deep military ties. One of its larger and most recent contracts was announced in October, when the U.S. Army awarded the company $823 million to contribute to an effort to modernize legacy battlefield intelligence systems.

Others on the list include Joby Aviation, a heavily funded electric aircraft developer that went public last year and has generated revenue under the U.S. Air Force’s Agility Prime program. And Anduril Industries, a 4-year-old startup launched by Oculus founder Palmer Luckey, is one of the few unicorns that counts the U.S. defense industry as a primary customer for its technology.

VCs may invest in defense technology, but historically shun weaponry

One area where we haven’t historically seen venture investment is around weaponry. By and large, the prevailing doctrine among VC funds is that while technologies with defense, crime and attack prevention, and military intelligence applications are fundable, things like missiles and automatic weapons are not.

To illustrate, we put together a (very partial) list of some of the defense- and intelligence-focused companies that have raised venture funding in the past couple years.


Please note here we haven’t touched the surface on military investment in startups and transfer of military-developed technologies for commercial development. This is itself something that historians could devote careers to: The list of technologies that had their seed as part of DARPA alone includes such things as the precursor to the modern internet.

But—as that $770 billion budget would lead one to suspect—there’s plenty of room for investment in transformative technologies with applications in the military and commercial spheres.

Illustration: Dom Guzman

Stay up to date with recent funding rounds, acquisitions, and more with the Crunchbase Daily.

Copy link