U.S. Venture Capital is Now in the High Tech Weapons Business

By Paolo von Schirach

August 29, 2024 – The Wall Street Journal recently featured Anduril, a defense start-up company and its founder Palmer Luckey, as an illustrative example of Silicon Valley’s venture capitalists’ new focus on new defense companies working on futuristic weapons systems.

The idea is that the established defense companies like Lockheed Martin, Northrop Grumman and Boeing somehow are trapped in a traditional way to think about war and weapons, while Silicon Valley entrepreneurs are free to think “crazy things” that may indeed lead to technological breakthroughs. Anduril thus far managed to raise $ 3.7 billion to work on autonomous weapons, like new drones and uncrewed submarines.

This trend of outsiders stepping into the turf “reserved” to the established defense industries started a few years ago, in 2015, when Elon Musk’s Space X managed to a get a spot in the military-launch market. In the same year, according to the above referenced WSJ story, the U.S. Department of Defense established a Silicon Valley outfit called “Defense Innovation Unit Experimental.” This significant move into a new space, away from the traditional R & D environment of the established defense companies, represented the overdue acknowledgement that Silicon Valley –America’s high tech hub—can provide some of the critical innovation that the US military needs to stay ahead; this way retaining the ability to deploy the most advanced weapons systems that must be at the core of a powerful and credible U.S. deterrent.

Experience tells us that many, if not most, start-ups fail. Still, Silicon Valley defense focused firms, now backed by billions provided by venture capitalists, may have the advantage of not being tied to the traditional way of thinking about weapons.

It is in large part a matter of a different psychology. Pentagon weapons procurement officials, the leaders of defense companies and high ranking military officers all come from the same environment and experiences. They are used to think of defense goods within conventional parameters: fighter jets, bombers, artillery pieces, tanks, missiles, aircraft carriers. They are reluctant to entertain, let alone fund, wild new experiments in uncharted territory.

However, the ingenuity of those who are not tied to fixed models may yield stunning results. For example, think for a moment of the Ukrainian imagination in creating Malyuk, (“Sea Baby”), Mamai’ (‘Mother’), and MAGURA (Maritime Autonomous Guard Unmanned Robotic Apparatus.) All of them are Ukrainian made sea drones that have been successfully deployed  to attack and sink many Russian ships in the Black Sea, forcing the Russian navy to move away from its bases in western Crimea. These are extraordinary –and very low cost– naval victories achieved by Ukraine, a country that does not even have a traditional navy to speak of.

Time will tell whether these ambitious Silicon Valley defense startups, now funded by large amounts of venture capital, will be able to deliver cost-effective innovation that will make a difference in the battlefield. These new companies still need to prove themselves. For instance, “Ghost,” a drone produced by Anduril, deployed by Ukraine in its unequal fight against Russia, had to be upgraded and fixed before it could work properly. The Russians were able to successfully jam and therefore disable earlier models.

In the end, is this love affair between venture capital and this new breed of defense-focused Silicon Valley startups just a momentary fashion? Or is this a solid new trend? Much will depend on the success of this “thinking out of the box.” The future of warfare may be shaped by those who can develop and deploy winning, better if low cost, asymmetric or brand new capabilities.

If you can disable all the onboard electronics of the Lockheed Martin F-35, there goes the most sophisticated and most expensive fighter jet ever designed. If you can design an inexpensive weapon that can sink or disable a super carrier, there goes the U.S. Navy core capability. Better yet, if you create a way to disable the electric grid of your opponent, for good, you have won the war –without firing a single shot.

Paolo von Schirach is the President of the Global Policy Institute, a Washington DC think tank, and Professor of Political Science and International Relations at Bay Atlantic University, also in Washington, DC. He is also the Editor of the Schirach Report.

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