Robots, Replicator, and Red Lines: 10 Predictions for Defense Tech in 2024
This year was a whirlwind for defense tech. 2023's frenzy of new startups, mega-rounds, and rising geopolitical tensions shows no signs of slowing down. These are my 10 predictions for 2024.
This year was a whirlwind for defense tech. 2023's frenzy of new startups, mega-rounds, and rising geopolitical tensions shows no signs of slowing down. Expect major shifts in 2024 as great power competition looms larger than ever, tech redefines warfare, and VCs rush into the space.
Here are my top 10 predictions for national security investing in 2024:
1. A Fallen Unicorn: Prepare for a high-profile casualty as at least one major defense tech startup fails to make it through the valley of death. I hope this doesn't happen, but expect at least one member of the SHARPE group (ShieldAI, HawkEye 360, Anduril, Rebellion Defense, Palantir, and Epirus) to come crashing back down to reality.
2. Replicator Rises: DepSecDef Kathleen Hicks' ambitious Replicator initiative, designed to fast-track all-domain attritable autonomy tech, gains traction. Expect increased funding and expedited procurement processes, propelling promising players into the arms race.
3. Industrial Ignition: The American defense industrial base roars back to life. We'll see a surge in new companies dedicated to bolstering domestic manufacturing and industrial capabilities. The Arsenal of Democracy returns.
4. VC Frenzy: Get ready for even more VCs to enter the category. As investors look for the next Palantir or Anduril amongst a limited crop of new startups, we’ll likely see inflated valuations and reckless bidding wars that drag down returns for the whole sector.
5. Electronic Armageddon: There will be at least one major escalation in electronic warfare. Critical infrastructure, especially operational technology and industrial control systems, will be tested, demanding robust cybersecurity solutions.
6. AI on Hold: Don't hold your breath for widespread AI adoption within the DoD or IC just yet. Integrating these complex tools into real-world military applications will take time, despite their undeniable potential.
7. Borders on Fire: Expect another flashpoint in the global game of territorial tensions. Keep an eye on volatile regions like Ukraine/Russia, Gaza/Israel, Venezuela/Guyana, and the Red Sea/Houthis. Taiwan/China looms large, though we could see things erupt in an entirely unexpected place.
8. Future Focus Fallacy: Prepare for continued frustration as the DoD prioritizes long-term, exquisite systems over critical, immediate needs. This disconnect between futuristic planning and present-day requirements could leave our national security vulnerable.
9. Biosecurity Takes Center Stage: In the wake of heightened concerns about bioterrorism and pandemics, governments and defense agencies significantly ramp up investments in biosecurity measures. This includes developing rapid detection systems, novel vaccines, and countermeasures against potential biological threats.
10. TikTok (Unfortunately) Thrives: National security extends beyond military muscle. It encompasses economic, political, and societal resilience. Will we finally do something about the threat of foreign- controlled platforms like TikTok? I hope so, but it's unlikely.
No matter how these predictions play out, I hope all founders & investors approach this category with clear-eyed strategic thinking, responsible underwriting, and a firm commitment to investing in American resilience & dynamism.
Let me know where you agree, disagree, or have predictions of your own in the comments.