Venture capital is opening the gates for defense tech

W
elcome to the TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s inspired by the daily TechCrunch+ column where it gets its name. Want it in your inbox every Saturday? Sign up here.

“Once an arena just for contrarian VCs, miltech [or defense tech] is booming and there is an appetite for the government sector to outsource R&D to the VC crowd,” my former boss Matthew Panzarino wrote not too long ago. I noticed that at TechCrunch Disrupt and in recent news, too. — Anna

Defense tech is no longer a hard no

Defense company Anduril was once described as “tech’s most controversial startup.” But that hasn’t stopped it from raising a massive $1.48 billion Series E round of funding last December, which is presumably fueling its recent acquisition spree. Its latest deal is the takeover of Blue Force Technologies, the design and engineering firm behind the “Fury” unmanned fighter jet.

Anduril is more than a counterpoint, though. It is symbolic of a trend in which defense tech and venture capital dollars are no longer antithetic. As my TechCrunch colleague Aria Alamalhodaei noted:

“Anduril’s success has flown in opposition to the long-dominant perspective that defense tech is ill-suited for venture dollars. Such success stories, combined with rising geopolitical tensions and a sea change inside the Pentagon itself, has meant that more startups than ever before are actively seeking to work on tech at the intersection of national security and commercial — and more investors are willing to fund them.”