Startups in the sector are also expanding their use cases beyond defense, which is attracting more investors. For instance, Hypergiant, a geospatial data visualization startup, has applications in several sectors in addition to defense. The defense tech sector is also seeing increased interest from investors who specialize in other areas. However, some argue that more investors should focus on the sector. Despite this, signs indicate that defense tech investing is taking root, with technologies like space tech, AI, and cybersecurity becoming more prominent.
Key takeaways:
- Defense tech startups in the U.S. saw only $2.1 billion invested in 53 total deals last year, including Anduril’s $1.5 billion, compared to more than $10 billion invested in U.S.-based cybersecurity startups.
- Despite the historically complicated relationship between defense tech and venture capital, interest in the sector is increasing, with a shift in focus from traditional military hardware to space, cybersecurity, and AI.
- Successful exits and growing market sizes are attracting more investors to the defense tech sector. Companies like Shield AI, Anduril, and Palantir have shown significant growth and success.
- Many defense tech startups are expanding their use cases beyond defense, which is attracting more investors. For instance, Hypergiant has use cases in several different sectors for its geospatial data platform in addition to defense.