Ireland Degges
Though venture capitalists have invested heavily into defense startups, these companies have not yet captured the attention of the U.S. Department of Defense, the Wall Street Journal reported on Thursday.
In recent years, Silicon Valley tech startups have begun to express an interest in government contracts, conducting lobbying efforts and building relationships with defense officials.
Despite these endeavors, defense spending trends continue to reflect a strong preference for more established contractors. In fiscal year 2023, startups only accounted for 1 percent of the $411 billion in contracts issued by the DOD. According to data from Govini, this amount represents a slight increase from the previous year, in which these businesses received half a percent of the department’s total contract spending.
This small uptick was driven by DOD efforts to engage with nontraditional partners.
“We have realized that we had an ecosystem that was very difficult to penetrate. And we have done amazing work to open it up,” said Thomas Browning, who performs the duties of the assistant secretary of defense for mission capabilities.
One way the department is working to bring startups into its technology ecosystem is through Replicator, a drone acquisition program that may provide a pathway for startups to enter the defense market.
It has also elevated the Defense Innovation Unit, an agency dedicated to accelerating the department’s adoption of industry technologies.
“I wish we had gone much more quickly as a department to get where we need to go,” said DIU Director Doug Beck. Now, he said, the DOD is “absolutely on the right track.”
Some startups have been able to break through contracting barriers. Skydio, a drone startup, is currently working under a $100 million Army award, and Epirus, a developer of technology designed to combat drone swarms, booked a $66 million Army contract last year.
