Are defense VCs doing enough?
To secure a future where America thrives, we must invest beyond the battlefield. We need more founders & investors solving our hardest challenges across our economy, government, and society as well.
Over the last few years, thousands of founders, operators, and investors have started building in the aerospace & defense category to help bolster American national security. We absolutely need this talent & capital to improve our military, but this influx has created a new problem. The number of VCs investing in defense tech now outweighs the number of viable venture backable companies in this category.
To counter this supply & demand mismatch, we need to expand how we think about defense and national security. There are three other essential parts of America’s national power that defense VCs should consider investing in. They are a Robust Economy, Effective Government, and Resilient Society.
America’s strength must come from more than just aircraft carriers and fighter jets. It must have a robust economy powered by free markets and the rule of law, an effective government that crafts policy & administers vital programs for the national good, and a resilient culture & society that is motivated to achieve a better future.
Robust Economy: A strong, self-sufficient economy that can withstand adverse market conditions is a necessity for national security. For decades we’ve enjoyed extreme economic power relative to other geopolitical players, but we’re now falling behind. There is an immense amount of opportunity for startups within:
Revitalizing our industrial base & boosting manufacturing capacity like Senra, Hadrian, Atomic Industries, Varda, and Gecko Robotics. We should be actively leveraging advanced robotics and 3D printing to dramatically enhance efficiency, enable lower-cost manufacturing, and decrease reliance on overseas production.
Increasing access to raw materials, natural resources, and critical minerals like Redwood Materials and CMI so we can reliably get critical inputs for semiconductors, batteries, military systems, and items for other vital sectors.
Increasing resilience of supply chains & logistics like Flexport, Loop, Airhouse, Nuvo Cargo, and Mundi to ensure an integrated, reliable, and safe global supply network.
Workforce training & development like Shift, Traba, Bloom, and Workrise so American workers are equipped with relevant skills for the decades ahead.
Financial empowerment & wealth generation like Robinhood, Affirm, Chime, and Acorns, so we have a strong middle class, a strengthened tax base, and sustained economic growth.
Energy independence like Last Energy, Radiant Nuclear, and Base that offer a path to a secure and clean energy future across nuclear power, grid modernization, and storage.
Effective Government: We’ve all been stuck in a long DMV line, wrestled a Gordian Knot of confusing tax forms, or navigated other endlessly bureaucratic government services. Our frustration isn’t misplaced. Many government programs need to be modernized. We could unlock a new level of effective public administration by A) building tools that help the government operate more effectively themselves; or by B) creating new private enterprises that augment or replace existing public programs. Some questions I’ve been asking myself include:
Can we build a modern, responsive public administrative system that quickly delivers desired outcomes across all federal, state, and local systems?
Can we rebuild the education system in a way that cost effectively prepares students for a relevant future?
Can we establish a secure, nationwide digital identity verification system that enhances privacy, reduces identity theft, and simplifies interactions with government services from voting to tax filing?
Can we reduce red tape by simplifying and expediting the process for approving and implementing critical infrastructure projects? Can we use technology to monitor their progress, enhance safety, and ensure on-time delivery within budget?
Organizations like the Department of Health & Human Services, the judicial system and court services, Dept of Agriculture, Department of Education, the Dept of Housing & Urban Development, and the Small Business Administration are massive organizations. Improvements in any of these places could streamline operations, reduce costs, enable better service delivery, and rebuild relationships between the government and the people. Imagine what else could be done to ensure more effective use of GDP.
Resilient Society: Cyberattacks, border crossings, and higher education leadership failures all grab headlines, but a far more chilling threat underpins them all: the erosion of trust, the rise of isolation, and the decline of shared purpose and values. The cost of a fractured society is measured not in dollars, but in lost potential. Today American society is fighting against:
Political partisanship that divides even like minded people
Severe mental illness, substance abuse, and other forms of addiction
Poor nutrition and lifestyle habits that cause obesity and bloat healthcare costs
Demographic imbalances that strain social safety programs
Immigration challenges that prevent value-add people from becoming citizens
Misinformation attacks and media influence by foreign autocracies
The seeds of tomorrow’s success lies in the minds of our children, the resilience of our families, and the bridges within our communities. We should invest in new technologies & business models that can address these issues and strengthen the foundation of our culture.
Overall, to secure a future where America continues to thrive, we must invest beyond the battlefield. We desperately need more exceptional founders & builders solving our hardest challenges across our military, economy, government, and culture; and more investors that are unafraid of making high conviction investments into these spaces. If either of those sound like you, please feel free to reach out.