Startups should absolutely work with governments to support defense projects

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In these times of heightened tensions and global volatility, I feel startups can play a critical role in our defense, space and national security ecosystem by bringing the very latest innovation to public institutions, a few of whom lag startlingly far behind.

Startups and energetic investors within the sector are uniquely positioned to support the defense efforts of the West and the mission to maintain our societies protected. Let’s not mince our words: At once, we’re already locked in hybrid warfare with Russia, a nuclear-armed superpower, while tensions with one other, China, simmer just under the surface. Despotic regimes threaten our values and lifestyle, and few would predict that is about to alter anytime soon.

Yet despite all this, much of the technology and enterprise capital industry has shown little inclination to have interaction with the defense establishment. Prior to Russia’s invasion of Ukraine, over dinner with friends and colleagues, you risked triggering anguished disapproval (and much worse), by stating that you just consider startups should work with the likes of the Pentagon, NATO and Western governments typically. Today you largely garner a really different response: murmurs of assent.

The very latest, strongest technologies offer an edge to those that create and possess them – as we’ve got seen in a number of the Western firepower deployed in Ukraine, alongside Ukrainian battlefield innovation. The brutal truth is that in resting on our laurels, the West has allowed those that wish us harm to catch up, and in some instances, surpass our capabilities – and the tech industry is partially in charge.

For instance, in 2018, hundreds of Googlers signed a letter to their boss, Sundar Pichai, declaring that “Google mustn’t be within the business of war.” Specifically, they were protesting their employer’s involvement in a U.S. Department of Defense initiative, Project Maven, which was using Google AI tools to investigate military drone footage. “Constructing this technology to help the US Government in military surveillance – and potentially lethal outcomes – just isn’t acceptable,” they wrote.

This uncompromising and combative stance ultimately led to the choice by Google’s management not to renew its lucrative Maven contract, and shortly afterwards it also withdrew from contention for the Pentagon’s cloud computing contract often called the Joint Enterprise Defense Infrastructure cloud (JEDI) – reportedly price $10B over ten years.

Google employees were removed from alone in confronting their bosses over perceived collaboration with the Trump administration, which was widely reviled in progressive-leaning tech circles. Around the identical time, Microsoft employees called on CEO Satya Nadella to stop working with Immigration and Customs Enforcement (ICE), Amazon staff protested their company’s development of surveillance tech, while Salesforce employees signed a petition calling for its leaders to “re-examine” the corporate’s contract with US Customs and Border Protection (CBP)”.

What a difference just a few years make. Fast forward to 2022 and a mix of COVID-19 and its legacy, stressed and unstable global supply chains, Russia’s war with Ukraine, the primary threat of food insecurity within the U.S. or within the West since WW2, and increased tensions with China have prompted a pointy rethink from much of the tech and enterprise capital industry on its responsibilities towards government.

Today, in marked contrast to most other verticals, investment in aerospace and defense startups is surging. Between January and October 2022, according to PitchBook, VCs invested $7B in 114 aerospace and defense tech deals, which placed the sector on a trajectory to surpass 2021’s record $7.6B total. In 2018, VCs invested just $1.4B in those industries. (A component of this, notes PitchBook, could also be as a consequence of the actual fact defense and aerospace are reasonably more recession-proof than, say, consumer or enterprise products.)

I’m immensely proud that Techstars is probably the most energetic investors on this category. With almost about 100 investments overall in aerospace, defense and space tech, we’re one in all only three VCs to have participated in greater than 20 space startup deals since 2000, while 25% of the firms chosen for 2022 NASA Small Business Innovation Research contracts were Techstars-backed firms. One in every of our portfolio firms, Slingshot Aerospace recently closed a $40.8M Series A-2 funding round. Its clients include the U.S. Air Force, the U.S. Space Force, and NASA.

Yet there may be much ground to make up. A blog post from defense tech company Anduril that was cited in The Information put it this manner:

“Despite spending extra money than ever on defense, our military technology stays the identical. There may be more AI in a Tesla than in any U.S. military vehicle; higher computer vision in your Snapchat app than in any system the Department of Defense owns; and, until 2019, america’ nuclear arsenal operated off floppy disks.”

Recent relative calm convinced us, erroneously, that we were living in a stable, post-conflict world where threats to our lifestyle and maneuvers by bad actors could by some means be ignored or wished away. On this scenario, much of the Valley could persuade itself that it could refuse to construct products which can be designed to harm and kill (even when that just isn’t their overt aim). Such stances now seem naive and idealistic at best; posturing at worst.

Back in 2018, the hashtag #TechWontBuildIt was used to protest Big Tech’s government contracts. Not only must we construct, but there may be little time to waste.

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