The US Air Force has invested millions into the development of Hermeus’ hypersonic presidential jet.Hermeus
Silicon Valley is going to war.
A new cadre of tech startups is muscling its way into the entrenched defense industry, leveraging rapid advancements in AI and other military technologies to bring warfare into the future and win lucrative military contracts.
Traditional defense powerhouses like Lockheed Martin, Northrop Grumman, Raytheon, and Boeing typically dominate big-dollar American military deals. But tech advancements in the last 20 years, coupled with plenty of investment money to go around, have allowed new players to emerge, threatening the grip the classic defense behemoths once had on the industry.
Investors told Business Insider last year they expected 2024 to be big for defense startups, predicting a defense-tech hype cycle. “It’s clearer than ever that democracies face new threats and that the modern battlefield is changing beyond recognition,” Nathan Benaich, a founder and general partner at Air Street Capital, a firm that says it invests in AI-first technology, told BI at the time.
A handful of tech companies have already won multiple multimillion-dollar contracts from the US military.
“These awards represent a vital step in warfighter adoption of AI, moving cutting-edge technology from experiment to enterprise production,” Shannon Clark, head of defense growth at Palantir, a data analytics company, said earlier this year during an announcement for a lucrative Defense Department contract.
Here’s a look at some of the top tech companies working to disrupt the defense industry.
Former Google CEO Eric Schmidt’s company White Stork is working to develop drones for Ukraine. Shahar Azran via Getty Images
White Stork is a startup founded in 2022 by former Google cofounder Eric Schmidt. The company is developing drones that can use AI to identify potential targets.
At a lecture at Stanford University in April, Schmidt said the war in Ukraine had turned him into an “arms dealer.”
“Watching the Russians use tanks to destroy apartment buildings with little old ladies and kids just drove me crazy,” Schmidt said.
Shield AI’s surveillance drone. Shield AI
Shield AI, founded by former Navy SEAL Brandon Tseng in 2015, is a San Diego-based startup developing unmanned, AI-powered drones capable of combat, surveillance, and delivery in conflict zones. Investors recently valued Shield AI at $2.7 billion.
In July, the US Coast Guard awarded the company a $198 million contract for its unmanned V-BAT AI surveillance drones.
The Palantir logo on the New York Stock Exchange. Noam Galai/Getty Images
Palantir was founded in 2003 by a group that included former PayPal CEO Peter Thiel, but the company is still relatively new to the scene by defense industry standards.
Palantir develops software to process massive amounts of data. In May, the Defense Department paid the company $480 million to use its Maven prototype, software that analyzes data to speed up the work of intelligence analysts.
Applied Intuition was included in a contract to provide autonomous ground vehicles for the military. NurPhoto/Getty Images
Applied Intuition is a startup recently valued at $6 billion. Entrepreneur and venture capitalist Qasar Younis founded the company in 2017 to develop autonomous AI driving systems for cars and land vehicles.
The US Army chose the company in April — along with other contractors — to create prototype autonomous vehicles like tanks and other large machinery.
Skydio is a US drone-maker that has contracts with the US Army. Skydio
Skydio is a drone startup founded in 2012 and backed early on by venture capital firm Andreessen Horowitz. It became the first US drone maker to reach “unicorn” status in 2021.
The Army contracted Skydio in 2022 for $99.8 million to use the company’s systems for its Short Range Reconnaissance (SRR) program. The Army says SRR systems are a “force multiplier” that gives platoon-level soldiers better reconnaissance and target acquisition capabilities.
Skydio announced in January that the contract is entering its final phase, during which it intends to create a round of its Skydio X10D drones for the Army. The small, lightweight drones boast “high-resolution visual and radiometric thermal cameras” to gather “precise, accurate information,” the company says.
Epirus created a microwave pulse system to send drones and aircraft hurdling back toward the ground. Global Images Ukraine/Getty Images
Torrance, California-based Epirus recently completed a $66 million contract for the US Army to build microwave pulse devices that can disrupt aircraft and cause them to fall from the sky.
The company says it developed the product, called Leonidas, in “unprecedented timeframes for air defense systems, keeping pace with the strategic priorities of the DOD’s rapid prototyping efforts.”
The US Air Force has invested millions into the development of Hermeus’ hypersonic presidential jet. Hermeus
Aerospace engineer AJ Piplica founded Hermeus in 2018. The company raised $100 million in 2022, led by investors like Thiel and OpenAI CEO Sam Altman.
Hermeus is developing a series of hypersonic aircraft that can travel five times the speed of sound. Hermeus says it has tested prototypes that can travel at Mach 5, or about 3,300 mph. In 2020, the US Air Force contracted Hermeus to develop a hypersonic presidential jet.
In 2022, the US Air Force awarded Hermeus another $950 million contract to help develop its Advanced Battle Management System, which is the Air Force’s next-generation control and communication system.
Scale AI is working with the Department of Defense on artificial intelligence projects. SOPA Images/Getty Images
Scale AI is a San Francisco-based artificial intelligence startup that was valued at $7 billion in early 2021, but laid off 20% of its staff last year.
In February, the company announced it had partnered with the Defense Department’s artificial intelligence office to test and evaluate large language AI models.
The goal is to provide the military with a “framework” to deploy AI safely by measuring performance, creating specialized evaluation sets to test AI military support models, and generating “real-time feedback for warfighters,” the company says.
SpaceX received a $1.8 billion contract to create spy satellites for the US government. Joe Raedle/Getty Images
In 2022, SpaceX debuted its Starshield satellite, which is similar to its Starlink satellites but is designed for government use and intended to “support national security efforts.”
The company has also provided satellite connectivity through Starlink for military forces in Ukraine. SpaceX CEO Elon Musk has faced pressure from numerous governments and groups to leverage the Starlink satellite network. One US congressman pressured Musk in February to provide service for military forces in Taiwan.
Reuters reported in May that SpaceX received a $1.8 billion deal from the US government in 2021 to create “millions of spy satellites” that sources said would make it “so no one can hide.”
