Venture capital investment in defense technology startups hit an impressive $19 billion in the second quarter of 2025, marking a significant milestone in the evolving relationship between private capital and national security. This surge reflects broader shifts in global geopolitics and rapid advances in technology, with family offices playing a notable role in fueling this growth. The defense sector, historically dominated by established contractors, is welcoming nimble startups that are redefining how innovation serves military needs.
Geopolitical uncertainty has been a consistent driver behind this surge. The U.S.-led world order faces challenges from rising powers and shifting alliances, compelling governments to rethink defense priorities. In response, venture capitalists recognize the strategic importance of supporting startups that develop autonomous systems, artificial intelligence, cybersecurity, and space-based technologies. These emerging capabilities are increasingly central to modern defense doctrines that prioritize agility and technological superiority.
One of the most prominent examples of this trend is Anduril Industries, known for bridging advanced software and hardware to accelerate military modernization. The company’s rapid ascent, which included securing a $2.5 billion funding round in Q2 2025 and a contract with the U.S. Special Operations Command, illustrates how startups are moving at a pace traditional contractors cannot match. Anduril’s contributions to U.S. defense efforts, including support in Ukraine, showcase the practical impact of venture-backed innovation on the battlefield.
Investment flows into defense tech are not limited to the Silicon Valley unicorns. Chaos Industries, a Los Angeles-based company focusing on counter-drone radar and communication systems, recently raised $510 million, reflecting the broad interest in niche, high-impact technologies. Forterra, developing autonomous systems for defense applications, secured $238 million in Series C funding as well. These examples highlight the diverse array of companies attracting capital, each addressing unique aspects of defense technology needs.
Family offices, private wealth management firms serving high-net-worth families, have become particularly active players in this space. With geopolitical tensions casting a long shadow, these investors see defense startups as opportunities to support sectors with resilient demand and long-term government contracts. Unlike traditional venture capital firms focused solely on financial returns, family offices often align investments with strategic outlooks on national security and technological leadership.
Julia DeWahl, Co-Founder and President of Antares Industries and a serial angel investor, notes that smaller companies can now compete with traditional defense primes because the Department of Defense has adapted its procurement approaches to embrace commercial innovation. According to DeWahl, this shift “has opened doors for startups to develop critical technologies faster, especially in areas like microreactors for defense and commercial use.” Antares Industries is a prime example, blending venture capital with Department of Energy and Department of Defense funding to advance next-generation nuclear microreactors.
Investment strategies have evolved to accommodate the unique challenges of defense markets, where government sales cycles can span several years and regulatory hurdles abound. Nevertheless, the appeal of stickier, contract-based revenue streams with expansion potential surpasses many other sectors. Additionally, non-dilutive funding from government grants reduces risk and supports technology refinement throughout product development cycles.
Globally, the defense tech venture capital boom mirrors similar upticks across Europe and Asia. European startups in Germany, Portugal, and others have raised substantial rounds, emphasizing dual-use technologies that serve both military and civilian markets. Meanwhile, Asia’s autonomous vehicle and defense mobility sectors also draw large investments, demonstrating that this is not a U.S.-centric phenomenon, but a worldwide wave of innovation driven by geopolitical realities.
The infusion of capital into defense startups is transforming the industry. Where traditionally innovation was incremental and slow, the introduction of venture capital brings a new dynamic that rewards rapid iteration and commercial viability. Firms like Andreessen Horowitz and Lux Capital have launched dedicated funds targeting defense tech, underlining the strategic importance of this emerging asset class. Their investment theses encompass a broad spectrum of technologies from aerospace to cybersecurity, recognizing the systemic impact these startups can have.
Despite these promising developments, challenges remain. Navigating government procurement processes, ensuring compliance with regulatory frameworks, and addressing the complexity of military requirements demand deep expertise. Startups must bridge the gap between cutting-edge technology and practical military applications, which often involves extensive collaboration with defense agencies.
Still, the trends are clear. The infusion of venture capital into defense startups not only supports national security priorities but also creates long-term value for investors through exposure to a sector with unique growth dynamics. The involvement of family offices adds another layer of stability and long-term vision to this expanding ecosystem, indicating that private investment will remain critical as governments modernize their defense capabilities in an uncertain world.
