Silicon Valley was seeded with giant military contracts, but it’s taken three decades for the tech sector and the Pentagon to really rekindle their complicated love affair. Today, defense tech is blowing up. The $2.7 trillion global industry is being propelled by a hype-fueled, hypersonic flywheel: multiple wars and growing geopolitical threats, which also drive budget increases. (The Trump administration wants to bump up the Pentagon’s to a record $1.5 trillion.) Procurement reform at the Department of Defense—or War—has accelerated deployment of new tech. Successes, along with the more visceral threats of the Russian and Chinese military, attract tech talent previously hesitant to work in defense. Rising budgets draw more capital and entrepreneurs to the sector, even those who previously vowed not to touch it.
No wonder the value of venture capital deals hit a record $49.1 billion last year, up from $27.2 billion a year earlier, according to data compiled by PitchBook. That includes companies that provide dual-use technology to both civilian and defense markets. Equity funding for defense tech more than doubled to $17.9 billion, according to CB Insights, outpacing overall equity funding, which rose 47% to $469.3 billion on the back of an AI frenzy.
Most of the defense deals are going toward autonomous flying drones, which have become essential for surveillance, strikes, and shooting down other drones; see the Dutch upstart Destinus, whose zippy AI-guided interceptors are helping Ukraine, and Anduril, the granddaddy of the new prime contractors, which is gearing up to build what could be one of the Pentagon’s first autonomous fighter jets. Boston-based Merlin, which is now raising money from the public markets, aims to bring autonomy to almost any conventional plane. But the drone deluge shouldn’t distract from other frontiers. A number of companies are using AI to push the boundaries of technology into harder domains, from patrolling space to sending drones out to sea for weeks at a time. Less visible but no less essential are the cyber assurances of Shift5; the resilient navigation of Xona and Astranis; and the augmented reality of Red6, which brings flight sims to the skies.
As they grapple with technical and bureaucratic challenges, these startups need to prove to investors—and the war department—that they can turn their flood of cash into actual production at scale. (They’ll also need to balance AI safety goals with the demands of a Pentagon that branded Anthropic a supply chain risk for refusing to budge on two ethical restrictions.) The buildup won’t be easy: The country’s current manufacturing processes for shipbuilding, munitions, and almost everything else are decades-old and rely on slow, unsustainable techniques and concentrated supply chains that can’t surge to meet demand. By innovating production itself, with robotics, software, modular design, and vertical integration, many of these startups hope to disprove the skeptics and fortify not only national security but a critically fragile industrial base.
1.Saronic
For reviving a Louisiana shipyard to build autonomous ships of the future
In just four years, Saronic has transformed into a defense tech leviathan aimed at closing a critical strategic gap: While China dominates over half of global shipbuilding, and can build a destroyer in three years, US destroyers currently take seven years to construct. Today, Saronic is making software for autonomous vessels and building the boats themselves, starting as small as the six-foot Spyglass and up to the Marauder, an 180-foot autonomous ship built for battle.
Founded by Dino Mavrookas—a former Navy SEAL Team Six operative with a Wharton MBA—and following the high-risk, software-first playbook of SpaceX and Anduril, Saronic doesn’t wait for government contracts to innovate. The results are disruptive. Backed by a $600 million Series C that quadrupled its valuation in 2025, Saronic bought a 60-year-old shipyard in Franklin, Louisiana, where workers completed the first Marauder in about nine months—the fastest American ship construction since World War II. The Navy has taken notice: in December it awarded Saronic its biggest deal yet: a $392 million production contract for the 24-foot Corsair, a mid-size vessel that costs under $2 million and moved from prototype to production in less than a year. Now the company is looking for a site for Port Alpha, a giant, next-generation shipyard that it says could be twice as large as Newport News Shipbuilding, the country’s biggest yard.
