Silicon Valley’s defense tech startups are booming as war shifts

A wave of defense tech startups in Silicon Valley is drawing billions in funding and reshaping America’s national security.

Anduril Industries, recently valued at $30.5 billion following its latest funding round, is among the so-called “neoprimes” — companies challenging the dominance of legacy contractors, dubbed “primes,” such as Lockheed Martin, Northrop Grumman, Boeing, General Dynamics, and RTX (formerly Raytheon).

“There’s more money than ever going to what we call the ‘neoprimes'” Jameson Darby, co-founder and director of autonomy at investment syndicate MilVet Angels, or MVA, told CNBC. “It’s still a fraction of the overall budget, but the trend is all positive.”

Other examples of defense tech startups challenging the incumbents include SpaceX and Palantir Technologies, said Darby, who is also a founding member of the U.S. Department of Defense’s Defense Innovation Unit.

Unlike the primes, these startups are faster, leaner and software-first — with many of them building things that can help close “critical technology gaps that are really important to national security,” said Ernestine Fu Mak, co-founder of MVA and founder of Brave Capital, a venture capital firm.

Venture funding for U.S.-based defense tech startups totaled about $38 billion through the first half of 2025, and could exceed its 2021 peak if the pace remains constant for the rest of the year, according to JPMorgan.

As the global war landscape changed over the past decades, the U.S. Department of Defense has identified several technologies that are critical to national security, including hypersonics, energy resilience, space technology, integrated sensing and cyber.

“In a post-9/11 world, the entire Department of Defense effectively focused on … the global war on terrorism. It was our military versus insurgents, guerrillas, asymmetric warfare, relatively low-tech fighters in most cases,” said Darby.

But war today is more focused on “great power competition,” said Mak.

“The focus is more on deterring and competing with [adversaries] in these very high-tech, multi-domain conflicts,” Mak added. “The battlefield is changing and new technologies are needed… warfare no longer being limited to land, sea, air. There’s also cyber and space domains that have become contested.”

Today, some of these Silicon Valley “neoprimes” are developing not just weapons, but also dual-use technologies that can be applied both commercially and by militaries.

“So things like artificial intelligence and autonomy have broad, sweeping commercial applications, but they’re also clearly a force multiplier in a military context,” said Darby. “[The] Department of War is rapidly assessing and adopting these dual-use technologies … they’re sending signals to the investment world, to the defense industrial base, that the U.S. government needs these things.”

That direction from the government has, in turn, provided a clear and strategic roadmap for both investors and entrepreneurs, said Mak.

Today, Mak says the syndicate’s roughly 250 members include tech founders, Wall Street financiers, company executives, intelligence officials, former military leaders and Navy SEALs. Together, they’ve invested in companies like Anduril Industries, Shield AI, Hermeus, Ursa Major and Aetherflux.

“Overall, we believe that ‘neoprimes’ cannot exist in the abstract. They require people — individuals who bring technical expertise, who carry a deep sense of mission, and who contribute complementary voices and talents. Together, this coalition forms what we are convening and calling the ‘new guard,'” said Mak.

She added that modern national security requires both the “warrior’s insight on the battlefield” and the “builder’s drive for innovation”.

“Working together with engaged, informed patriots whose participation strengthens our defense ecosystem and reinforces the very fabric of national security,” Mak said.

Mak and Darby both agree that as new technologies develop and make their way onto battlefields globally, it’s changing the way militaries fight, which can also pose new threats.

“You’re seeing these technologists, these builders … building defense tech, and the reason why they’re doing so, is not to initiate conflict, but rather to create a credible deterrent that discourages aggression,” said Mak.

“No one in defense tech is looking to wage war, rather, it’s looking to deter it and wanting adversaries to think twice before threatening peace and stability,” Mak added.