Defence Startups: Back to Where It All Started

Silicon Valley in its current form actually started out as a defence technology cluster, funded by the R&D spending of the U.S government during the cold war.

However, after that, the industry become more and more become concentrated towards a few large and establish contractors, operating with long-standing bureaucratic frameworks, which for many years, dominated the industry.

But over the last decade, and over the last few years specifically, a wave of new startups has entered the scene and are now signing partnerships both with governments and traditional contractors.

Silicon Valley is going back to its roots: Defence R&D

The defence sector is undergoing a fundamental shift. Due to wars, increasing geopolitical tensions, the rapid pace of technological advancement in AI, and rising budgets (NATO countries alone are increasing spending to 2-3% of GDP), the demand for faster innovation has never been greater. This environment has created a unique opportunity for startups—small, agile teams unburdened by legacy systems—to tackle the industry’s biggest challenges.

Silicon Valley which was once started as a hub for hardware and defence applications, became the world's largest hub for software, but is now seeing a renaissance of going back to its roots. And Silicon Valley is not alone. Major tech hubs around the U.S and Europe are creating defence clusters to accelerate innovation.

Startups Leading the Charge

Some of the more well-known and well-funded startups are already building ecosystems and standards on their own, such as:

 • Anduril Industries (Founded 2017): Based in California, Anduril focuses on autonomous systems and AI-driven defence solutions. Known for its cutting-edge drones and surveillance systems, the company build solutions for border security, situational awareness, and autonomous warfare.

 • Shield AI (Founded 2015): This San Diego-based company specializes in AI-powered autonomous systems, particularly for aerial reconnaissance. Shield AI’s flagship product, the Nova drone, uses advanced machine learning to navigate and gather intelligence in GPS-denied environments, offering a critical edge in complex operations.

 • Rebellion Defense (Founded 2019): Focused on software for defence and national security, Rebellion Defense provides AI-driven solutions for threat detection, mission planning, and cybersecurity.

 • Skydio (Founded 2014): Originally positioned as a consumer drone company, Skydio has made significant inroads into the defence sector. Its drones, known for their autonomous navigation and obstacle avoidance, are now being used for reconnaissance, training, and search-and-rescue missions.

 • Epirus (Founded 2018): Epirus focuses on directed-energy systems, including powerful counter-drone technology. Their high-power microwave systems can neutralize drone swarms in real time, addressing one of the fastest-growing threats in modern warfare.

 • Helsing (Founded 2021): Based in Berlin, Helsing is an AI defense company that specializes in the creation of AI-powered military solutions and components.

Why Startups Are Building in Defence

In addition to the obvious reason of massive amounts of funding is flowing into the industry, startups have a real advantage when it comes it innovation

1. Agility

Startups operate with a sense of urgency, quickly iterating on ideas and bringing products to market faster than traditional defence contractors.

2. Leveraging Dual-Use Technologies

Many defence startups are built on technologies initially developed for commercial applications—AI, drones, cloud computing, and robotics, for instance. This dual-use approach allows them to suddenly tap into a quickly-growing market they initially didn't plan to enter

3. Attracting Top Talent

Startups often attract the best engineers and entrepreneurs more quickly, who are drawn to the mission-driven nature of defence work compared to working in regular big-tech

4. Breaking Down Bureaucracy

Unlike legacy contractors, startups are less constrained by rigid processes and red tape. This allows them to work closely with end users—whether soldiers, analysts, or policymakers—and iterate based on real-world feedback.

Startups Looking forward

Governments from all over the world are now quickly establishing defence clusters, hackathons, and open-innovation challenges to find and fund companies with new solutions.

The promise is big: Startups that secure funding and local government contracts can quickly scale up to allied governments internationally and grow to large valuations.

The wave of defence startups is still in its early stages, but the trajectory is clear: Today's startups will be tomorrow's large players.