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Silicon Valley Embraces US Defense Tech Amid Rising Global Conflicts

By Todd Prince September 18, 2025

Summary

• US tech companies are increasingly collaborating with the Pentagon, reversing decades of resistance due to ethical concerns and complex contracting rules.
• Venture capitalists have invested over $28 billion in defense tech startups in 2025, focusing on dual-use technologies like robotics, cybersecurity, and quantum computing.
• Streamlined procurement procedures and rising global defense budgets are boosting startup opportunities, though breaking into Pentagon contracts remains challenging.

WASHINGTON -- For decades, most major US tech companies and investors steered clear of the Pentagon.

Some were turned off by the labyrinth of contracting rules that left most business in the hands of giants like Lockheed Martin and RTX. Others balked at the ethical questions of building weapons and surveillance systems.

But Russia's full-scale invasion of Ukraine, the conflict between Israel and Hamas, and China's rapid military rise have changed that calculus.

Gone is the resistance that Google faced in 2018 when it let the Pentagon use its emerging artificial intelligence to analyze drone footage for target identification, the decision set off a storm inside the Silicon Valley giant. Employee protests forced management to retreat from the deal.

The backlash, driven by a vocal minority inside Google, reflected a broader unease among some tech workers about their innovations being harnessed for lethal or ethically questionable military uses.

That resistance has largely melted away, giving way to venture capitalists who are pouring billions into defense tech startups, while engineers are leaving some of America's biggest companies to build the next generation of battlefield weapons.

"Every company I talk to wants to make sure that if there is something they can do, they are doing it," Emil Michael, the Pentagon's undersecretary for research and engineering, told a Washington defense technology conference last month, noting that the days when Silicon Valley shunned military work "are completely over."

The rewards are clear. The Trump administration is looking at a $1 trillion defense budget.

OpenAI, the San Francisco-based artificial intelligence company signed a $200 million defense contract in June, its first formal contract ever with the Pentagon. The previous month, Meta announced it was teaming up with Anduril to build extended reality (XR) devices for the US military.

The developments have sparked engineers and investors to channel their talent and money into dual-use technologies that can serve both commercial and military purposes.

Some analysts say that in some ways, Silicon Valley is returning to its roots.

Long before it became a hub for consumer apps and smartphones, the region grew out of Cold War-era federal investments in electronics, semiconductors, and computing.

"We have seen a real sea change," said Raj Shah, a former Air Force pilot who led the Pentagon's first Defense Innovation Unit and now co-runs Shield Capital, a venture fund focused on defense startups.

"Smart engineers are saying, 'I see what's happening in Israel, I see what's happening in Ukraine, and I can't take our way of life for granted. Instead of building a photo-sharing app, I'm going to build something that helps preserve this peace.'"

Money Flows

Venture capital, private equity firms, and other tech companies poured more than $28 billion into the sector in the first half of 2025, already surpassing most recent full-year totals. By comparison, just $18 billion flowed into defense tech in all of 2019, according to PitchBook.

The funding surge spans autonomous systems, robotics, software, cybersecurity, new materials, space tech, biotech, quantum computing and energy storage.

Rising defense budgets abroad are helping.

NATO allies agreed in June to boost military spending to 5 percent of GDP, with 3.5 percent for core defense and 1.5 percent for related areas such as cybersecurity and the defense industrial base. Streamlined procurement procedures are also making it easier for startups to compete.

Still, breaking into the Pentagon remains one of the toughest challenges in business. Even SpaceX and Palantir — two of the most successful defense entrants in decades — had to sue the Defense Department to win contracts.

Credentials are required just to get in, and each of the eight procurement centers in the Pentagon has different rules, budgets, and timelines. Civilian-friendly follow-ups are rare, and job titles are often indecipherable.

"Defense is not like other markets. Having the best technology will only get you so far. Success also hinges on understanding how the government buys, who the decision-makers are, and how to align with long-term programs of record," Point72 Ventures, a firm owned by billionaire investor Steve Cohen and that is focused on defense startups, said recently.

Matthew Steckman, president and chief business officer at Anduril, one of the largest defense tech startups by market capitalization, said the Pentagon is streamlining the way it procures weapons, but startups still struggle to land big orders that allow them to scale.

"If I want to become an enduring capability, or even an enduring public company - which is the ambition of a lot of venture capitalist funded companies - I have to figure out a way to leap across those small pools of funding into mainline budgets," he told RFE/RL.

Last year, the Pentagon spent about $2 billion on products from defense startups - a sliver of its $850 billion budget, according to the Silicon Valley Defense Group, a nonprofit set up to bridge relations between the tech community and the Pentagon.

The change in investor attitudes toward the defense industry comes at a time when analysts are warning the US industrial base is not prepared for a drawn-out conflict like Ukraine's, where tens of thousands of drones, for example, are launched each month.

For decades, they say, the US has prioritized high-cost, highly sophisticated systems like the F-35 fighter and Patriot missiles -- platforms difficult to produce quickly or in large numbers.

"In the new physics of the battlefield, if you can't produce, you lose. And every war game basically says that," Steckman said.

Dialing back extreme performance requirements, he added, can yield "massive gains on production."

Anduril's Barracuda-M cruise missiles, for example, require just 10 tools to build, allowing rapid scale-up.

Many startups are also pursuing modular designs, making it easier to swap out parts or software as battle conditions evolve. It's a model borrowed from commercial giants like Apple and Tesla.

Flush with venture capital, startups are also accelerating development and prototyping, sidestepping the government's traditional decade-long acquisition cycles.

Anduril used private funding to design and field the Roadrunner -- a reusable vertical takeoff aircraft -- in just two years. The Pentagon rewarded that effort with a $250 million contract for 500 Roadrunners, which are capable of intercepting airborne threats.

Michael, the Pentagon research chief, said he wants more firms to tap their own capital for developing innovative systems.

"The government can't take all the risk on risky projects. When there is more shared risk, that will lead to speed, that will lead to innovation," he said.

Source: https://www.rferl.org/a/silicon-valley-us- defense-tech-rising-global-conflicts/33533099.html

Copyright (c) 2025. RFE/RL, Inc. Reprinted with the permission of Radio Free Europe/Radio Liberty, 1201 Connecticut Ave., N.W. Washington DC 20036.