Beyond
The Battlefield
Defense Tech 2026
As defense tech investors during a period of reindustrialization and the early innings of AI, we wanted to get a clearer, data-driven look at how founders, operators, policymakers, and our fellow investors view the path ahead. Nearly half of our respondents are former military, and we are glad to have time in the service represented in the results. We heard from the over 200 folks that took our survey that innovation is thriving, but the convoluted path from prototype to production contract remains the final death knell for many startups. Autonomy-focused startups appear best positioned to break through, especially if we take steps to level the playing field with Primes, and reindustrialization is emerging as a unifying priority.
Some of the most interesting learnings came in the open-ended comments, and we are blown away by how many took the time to not only take the survey but share their rich perspective in longer-form thoughts. Reading the answers to our wild card question on what could upend our industry was an insightful look at the potential for escalating global conflict, the rise or collapse of AI in a defense context, macroeconomic pressure, government gridlock, execution failures, large-scale cyber attacks, and beyond.
In this inaugural “Beyond the Battlefield” report, we hope you find value in our defense community’s insights and look forward to seeing how sentiment will change over time. We are invigorated by the momentum around supporting national security and our industrial base, both in the innovation coming from new startups and in the efforts to make the procurement path smoother for bringing those ideas to the servicemember. We hope it does the same for our readers.
The Startups
Innovation in the private sector has always been a key underpinning of our strong national defense. While all eyes are on Anduril as the next defense tech startup to hit the public markets, we’re equally excited about what Adyton’s battlefield-ready operations kit, Percipient.ai’s geospatial intelligence platform, Astranis’s dedicated satellite networks, and many more will do for the future of the battlefield.
THE STARTUPS THAT WIN
While we all agree that AI and uncrewed systems startups are most likely to win defense production contracts, the collective crystal ball is less clear on how they compete with Primes to get there.
Defense production contracts will go to startups in…
Leveling the playing field with the Primes ⚖️
Do founders need to have both military and technical experience?
Reindustrialization & Supply Chain Resilience
Reindustrialization is in the zeitgeist of this moment in US defense. Production has long been seen as a critical pillar of deterrence. We're optimistic that the momentum from efforts by the current administration – from presidential executive orders promoting domestic production to Congressional actions and memos from the Secretary of War bolstering our efforts at reclaiming our global leadership – will open doors for the ways our respondents think we can get there.
MANUFACTURING RENAISSANCE?
We weren’t surprised to see investments, procurement improvements, and domestic incentives in the top three spots for how we reindustrialize. We hoped our respondents would have more clarity on the impact of this administration’s monetary and trade policies, but we’ll all have to wait and see what happens in 2026.
Key steps to reindustrialize
Executive monetary & trade policies: helping or hurting?
AI & Autonomy
While our defense tech friends aren’t sure if there’s enough trust in AI for it to be widely adopted by military buyers, they seem to agree that it stands to have an impact in cyber and information warfare. Some guidance and examples of success should help us get there.
IN AI WE (MAYBE?) TRUST
Our respondents don’t feel there is enough trust in AI for government buyers to begin meaningfully adopting, but many who shared more color clarified that they think it’s just not yet, with obvious steps to get us there in the not-too-distant future.
Is there enough trust in AI for government buyers?
What gets us to yes?
AI IN THE MILITARY
We’re not surprised that our respondents see AI adoption starting in cyber intelligence and technical information domains. We expect (hope!) that these breakthroughs are able to open the floodgates for AI adoption more broadly in the years to come.
AI military adoption will be in:
AI military impact will be in:
Wild Card
We had so many thoughtful insights in the responses to this question. If we had to sum up the top three things we heard: (1) war and geopolitical escalation either of ongoing conflicts or new ones (i.e. China invading Taiwan, US action in Venezuela); (2) the breakthrough or backlash of AI and autonomy; (3) economic and capital market shocks either at the macro level (i.e. recession) or from the reality of too many niche defense startups chasing limited dollars.
What could upend defense in 2026?
Investing Environment
While we would love to disagree, we’re not more positive than our network on the state of valuations in defense tech, nor do we see many IPOs on the horizon. But… we salute the 6% of optimists and hope to see them ringing the bell on an upcoming listing day!
M&A IN A FROTHY ERA…
The majority of respondents view current valuations as frothy, and we agree. Large defense contractors are expected to be the most likely acquirers of defense tech startups, although anyone with an AI innovation appears to be attractive to Big Tech in their AI supremacy race.
Defense tech valuations are…
Defense tech exit ramps
FULL SURVEY RESULTS
219 respondents from defense tech startups, investors, large public companies, finance, academia, active duty and government — nearly half with a military background — conducted the survey.
1
Startups in which areas are most likely to land defense production contracts? [Select up to 3]
| 72% | AI, Autonomy & Decision Systems |
| 24% | Critical Minerals & Materials |
| 26% | Advanced Energy & Power (including directed energy systems) |
| 10% | Microelectronics & Semiconductors |
| 31% | Space & Launch Systems |
| 18% | Cyber & Zero-Trust Infrastructure |
| 16% | Advanced Manufacturing |
| 22% | Hypersonics & Counter-Hypersonics |
| 52% | Uncrewed & Attritable Systems |
| 9% | Quantum & Next-Gen Sensing |
| 3% | Biotech & Human Performance |
| 23% | Logistics & Supply-Chain Intelligence |
| 6% | Other (please write in) |
2
What will actually level the playing field for startups competing with the Primes? [Select 1]
| 15% | Shorten the ATO gauntlet |
| 2% | Clarity on FCL contracts |
| 1% | Make CMMC achievable by humans |
| 12% | Reduce requirements-driven software procurement |
| 18% | Free up budget flexibility from Congress |
| 22% | Retire obsolete programs to fund innovation (“Divest to Invest”) |
| 3% | Expand CRADA authorities |
| 13% | Modernize SBIR/STTR programs |
| 14% | Other (please write in) |
3
What do you think the most critical components are of reindustrializing the United States? [Select up to 3]
| 16% | Modernize legacy manufacturing plants |
| 54% | Invest in advanced manufacturing (e.g., robotics, additive, etc) |
| 31% | Reshore key industries like semis, energy tech, and pharma |
| 37% | Incentivize domestic production via tax credits and public-private partnerships |
| 24% | Fund emerging technologies with DARPA-style funding |
| 37% | Expand technical education, apprenticeships, and reskilling on new technologies |
| 38% | Reduce barriers for venture-backed entrants by improving procurement and expanding access to capital |
| 19% | Expand domestic energy production |
| 14% | Create wartime without the war mobilization campaign |
| 11% | Other (please write in) |
4
How are current executive branch monetary and trade policies impacting reindustrialization? [Select 1]
| 2% | Helping significantly |
| 36% | Helping |
| 18% | No impact |
| 35% | Hurting |
| 9% | Hurting significantly |
5
Where will AI be most rapidly adopted by the military in the next year? [Select 1]
| 34% | Intelligence, Surveillance & Reconnaissance (ISR) |
| 16% | Command & Decision Support |
| 9% | Cyber Defense & Network Operations |
| 5% | Predictive Maintenance & Sustainment |
| 9% | Logistics & Supply Chain Management |
| 6% | Training & Simulation Environments |
| 15% | Administrative & Personnel Systems |
| 1% | Energy & Infrastructure Optimization |
| 5% | Other (please write in) |
6
Do you think there is enough comfort with and trust in AI technologies for government buyers to begin meaningfully adopting? [Select 1]
| 37% | Yes |
| 49% | No |
| 14% | Other (please write in) |
7
If you answered no above: what do you think will create enough trust? [Select all that apply]
| 36% | Widespread adoption in private industries |
| 22% | Clear regulatory framework |
| 36% | Elimination or significant reduction in hallucinations |
| 46% | Military guidance or mandates on where and how it should be implemented |
| 22% | Other (please write in) |
8
By the end of 2026, where do you think AI will make the biggest difference in how the U.S. fights? [Select 1]
| 3% | Land |
| 9% | Air |
| 4% | Maritime |
| 3% | Space |
| 49% | Cyber & Information Warfare |
| 28% | Command & Control / Joint Operations |
| 4% | Other (please write in) |
9
If you had to select one thing that is most likely to upend the industry next year, what would it be? [Please write in]
| [Open field] |
10
How would you describe today’s defense tech valuations? [Select 1]
| 18% | Bubble: Darpa Meets Dot-Com |
| 56% | Frothy: Champagne Valuations on an MRE budget |
| 22% | Full but fair: Mission Aligned Multiples |
| 4% | Basement bargains: Stealth-mode Steals |
11
What is the most likely exit ramp for defense tech startups? [Select 1]
| 6% | Headed to Wall Street: IPO |
| 31% | Welcome to the Beltway: Acquisition by large defense contractor |
| 20% | AWS meets Aegis: Acquisition by Big Tech or other Dual-Use Firms |
| 18% | The Insurgents Band Together: M&A with other defense tech startups |
| 17% | Private Equity Finds its Inner Patriot: Roll-ups by PE |
| 8% | Other (please write in) |
12
Does both military experience and technical experience need to be represented among the co-founders of a defense tech company for it to be successful? [Select 1]
| 39% | Yes |
| 37% | No |
| 24% | Depends (please write in) |
13
Which category best describes your employer? [Select 1]
| 2% | Academia / Research Institution |
| 4% | Military (Active, Guard, Reserve) |
| 2% | U.S. Government |
| 1% | Non-U.S. Government |
| 28% | Investor |
| 49% | Private company / startup |
| 3% | Large / public company |
| 2% | Professional services |
| 3% | Advisor / consultant |
| 2% | Banking / Finance |
| 0% | Media / Journalism |
| 4% | Other (please write in) |
14
Do you have a military background? [Select 1]
| 47% | Yes |
| 53% | No |