In the US, investment in military tech startups increased amid the war in Ukraine and confrontation

Investment in military tech start-ups is skyrocketing as the war in Ukraine and geopolitical tensions with China lead to confidence that the US government will win lucrative contracts with Silicon Valley companies that make advanced defense systems.

U.S. venture capitalists closed more than 200 defense and aerospace deals in the first five months of this year, worth nearly $17 billion, according to PitchBook data, more than the sector raised in all of 2019.

In the US, investment in military tech startups increased amid the war in Ukraine and confrontation with China

US venture investment in defense startups has grown from less than $16 billion in 2019 to $33 billion in 2022. Investors poured a record $14.5 billion into these startups in the first quarter of this year.

Silicon Valley has eschewed defense tech for years. According to comments from more than 15 investors and founders, that wariness has been replaced by a belief that startups can finally get a significant share of the mammoth US defense budget, which has grown over two decades to a record $886 billion for 2024.

Large venture capitalists, including Andreessen Horowitz and Sequoia Capital, have begun investing in companies producing defense products, as well as "kinetic" weapons systems.

Anduril Industries, a $9 billion defense tech company whose biggest backer is Andreessen Horowitz, recently revealed it was in talks to develop its first weapon by building a version of autonomous drones with "loitering munitions." Last year, Los Angeles-based Anduril won a $1 billion contract from the US Special Operations Command to integrate systems that can identify, track and intercept enemy drones.

According to experts, the Russian invasion of Ukraine "changed the rules of the game" for the interest of the US military in commercial technologies.