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Vertical Snapshot: Defense Tech


Vertical Snapshot: Defense Tech

May 22, 2023

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Uncle Sam’s defense tech checkbook 

With rising geopolitical tensions and government acquisition reforms, investment in defense tech is on track to surge to nearly $185 billion by 2027. Our 2023 Vertical Snapshot: Defense Tech report dives into the industry drivers and the startups poised for liftoff.

Key takeaways include:

  • Renewable energy and biotech ranked as the top defense tech segments by deal flow in 2022.  
  • 71% of exit activity in the space since 2016 has involved strategic acquisitions.  
  • Despite a projected CAGR of nearly 16%, there are challenges: the "valley of death" funding gap, government bureaucracy, and specialized talent shortages. 

Table of contents
Executive summary 3
Introduction 4
Defense innovation ecosystem 5
       DoD innovation organizations 5
       A variety of funding options 8
       The Office of Strategic Capital 10
       Challenges 10
       Go-to-market strategies for startups 11
Defense tech timeline 12
Industry drivers 17
Outlook 19
Defense tech taxonomy 20
Defense tech market map 26
Market size 28
VC activity 29
Key players 34
Key deals and contracts 43
Recommended reads 45