In these times of heightened tensions and global volatility, I believe startups can play an important role in our defense, space and national security system by bringing the latest innovations to public enterprises, some of which are startlingly far behind.
Start-ups and active investors in this sector are uniquely positioned to support the West’s defense efforts and mission to keep our communities safe. Let us not get our word for it: Right now, we are already engaged in a hybrid war with Russia, a nuclear-armed superpower, while tensions with another, China, are simmering beneath the surface. Authoritarian regimes threaten our values and way of life, and few expect that to change anytime soon.
Yet despite all this, much of the technology and venture capital industry has shown little inclination to do business with the defense establishment. Before the Russian invasion of Ukraine, at dinner with friends and co-workers, you risked eliciting sad denunciations (and much worse), by saying that you thought startups should work with the likes of the Pentagon, NATO and Western governments in general. Today you pretty much get an entirely different response: a hum of approval.
The latest and most powerful technologies offer an advantage to those who create and own them – as we’ve seen with some Western firepower deployed to Ukraine, along with Ukrainian battlefield innovation. The harsh truth is that, by resting on our laurels, the West has allowed those who wish to do us harm and, in some cases, exceed our capabilities — and the tech industry is partly to blame.
For example, in 2018, thousands of Google employees signed a letter to their boss, Sundar Pichai, declaring that “Google should not be in the field of war.” Specifically, they were protesting the employer’s involvement in a US Department of Defense initiative, Project Maven, which was using Google AI tools to analyze military drone footage. “Building this technology to assist the United States government in military surveillance – and the potentially fatal outcome – is unacceptable,” they wrote.
This tough and combative stance eventually led to Google management’s decision not to renew the lucrative Maven contract, and shortly thereafter it also withdrew from competing for the Pentagon’s Joint Enterprise Defense Infrastructure cloud (JEDI) contract – worth $10. B for ten years.
Google employees weren’t alone in confronting their bosses about perceived collaboration with the Trump administration, something that has been widely reviled in progressive-leaning tech circles. Around the same time, Microsoft employees called on CEO Satya Nadella to stop working with Immigration and Customs Enforcement (ICE), Amazon workers protested their company’s development of surveillance technology, while Salesforce employees signed a petition asking its leaders to “reexamine” the company’s contract with Customs and Protection. American Frontier (CBP).
What a difference a few years make. Fast forward to 2022 and the combination of COVID-19 and its legacy, strained and unstable global supply chains, Russia’s war with Ukraine, the first threat of food insecurity in the US or in the West since World War II, and rising tensions with China. A sharp rethinking on the part of much of the technology and venture capital industry regarding their responsibilities to government.
Today, in marked contrast to most other sectors, investment in aerospace and defense startups is on the rise. Between January and October 2022, according to PitchBook, venture capitalists invested $7 billion in 114 aerospace and defense technology deals, putting the sector on a trajectory to surpass the 2021 record of $7.6 billion. In 2018, venture capital invested just $1.4 billion in those industries. (The PitchBook notes that part of this may be due to the fact that defense and aerospace are more resilient than, say, consumer or enterprise products.)
I’m very proud that Techstars is one of the most active investors in this category. With nearly 100 investments overall in aerospace, defense and space technology, we are one of only three venture capital firms that have been involved in more than 20 space startup deals since 2000, while 25% of companies selected for innovation research contracts NASA’s Small Business of 2022 were Techstars-supported businesses. One of our portfolio companies, Slingshot Aerospace, recently closed a $40.8 million Series A-2 funding round. Among its clients are the US Air Force, the US Space Force, and NASA.
However, there is a lot of ground to make up. A blog post from defense tech company Anduril, cited in The Information, put it this way:
Although more money is being spent on defense than ever before, our military technology remains the same. The Tesla has more artificial intelligence than any US military vehicle; better computer vision in your Snapchat app than any system the mod has; Until 2019, the US nuclear arsenal was powered by floppy disks.”
Recent relative calm has convinced us, wrongly, that we live in a stable post-conflict world where threats to our way of life and the maneuvers of bad actors can somehow be ignored or eliminated. In this scenario, much of the Valley could convince itself that it might refuse to build products designed to hurt and kill (even when that is not their overt goal). These attitudes now seem naive and utopian at best. Attitudes at worst.
Back in 2018, the hashtag #TechWontBuildIt was used to protest Big Tech’s government contracts. Not only should we build, but there is little time to lose.