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Defense Tech Funding Slows At Start Of Year

Defense tech became a popular topic last year — especially as the likes of Gecko Robotics, Shield AI and True Anomaly racked up big rounds — but this year has not continued that hot streak for the industry.

Through the middle of May, funding is less than half of what it was at the same point last year, per Crunchbase data, despite the war in Ukraine continuing into its third year and tensions in the Middle East running high. 

In Q1, funding to startups in the industries of military, national security and law enforcement dropped to $118 million, a 74% drop from the $459 million invested in such startups in Q1 of last year.


For the year through the middle of Q2, only $228 million has been raised by defense startups, a 62% decline from the nearly $600 million raised though the same point last year  — although obviously that could change drastically if the reported Anduril round of $1.5 billion at a $12.5 billion valuation becomes official.

Where’s the cash?

Speaking of Anduril, it was that software and hardware defense tech startup that seemed to prompt many to re-notice the industry once again in late 2022, when it closed a massive $1.5 billion Series E.

Defense tech has often been a hard sell to venture investors, who sometimes do not want to invest in it for their own moral reasons or due to pressure from LPs, despite technologies developed by startups being used by the military for decades.

However, the big round to Anduril — the fourth-largest round raised by a U.S.-based startup in 2022 — seemed to spur on a gold rush for defense startups last year.

That eventually led to a flourish of funding at the end of the year, when defense tech startups raised a whopping $802 million. The big deals that quarter included:

Defense tech investment slows

However, the first four-and-a-half months of this year have told a different story. 

There have been no nine-figure raises in the space. In fact, the largest this calendar year have been:

  • This month, Kihei, Hawaii-based satellite-tracking software developer Privateer raised a $56.5 million round led by space-focused venture capital firm Aero X Ventures and acquired the analytics firm Orbital Insight.
  • In March, Colorado Springs, Colorado-based Defense Unicorns, a software startup that provides open-source software and AI capabilities for national security systems, raised a $35 million Series A.
  • Also this month, Tucson, Arizona-based World View, a stratospheric exploration startup, locked up a $25 million Series D.

Of course, those numbers may not tell the complete story of defense tech funding.

The industry is hard to define. One of this month’s biggest rounds — Scale AI raising $1 billion in a round led by Accel that values the data labeling and evaluation startup at a stunning $13.8 billion — isn’t a defense tech company per se, but its data labeling and evaluation technology is used in defense applications.

So while funding to startups staunchly in the sector is down, many other overlapping sectors such as cybersecurity and robotics have seen an increase in funding from Q4 2023 to Q1 of this year.

In cybersecurity, cybersecurity startups raised nearly $2.7 billion in Q1 2024, a 69% increase from the previous quarter, when cyber startups raised just $1.6 billion, per Crunchbase data.

The same is true for robotics. Venture funding in the sector jumped from $1.4 billion in Q4 2023 to $2.1 billion last quarter, per Crunchbase data.

It’s also important to remember that due to the small numbers associated with defense tech funding, one big round can make a significant difference. Anduril raising a billion dollars or two certainly would change the complexion of any quarter.

Nevertheless, it is noteworthy that funding has significantly slowed in the sector — even if temporarily.


Defense tech is defined by the industries of military, national security and law enforcement, according to Crunchbase data. Most announced rounds are represented in the database; however, there could be a small time lag for rounds reported late in the quarter.

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Illustration: Dom Guzman


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