WASHINTON, July 19 — Venture capital investment in defense technology startups reached $35 billion in 2024, a record figure that more than triples the sector’s total from four years earlier. The data, compiled by PitchBook, marks the latest milestone in a sustained shift of private capital toward military and national security applications. The numbers under the hood tell a story of accelerating institutional appetite.
In 2020, defense tech startups raised $9 billion. By 2023 that had climbed to $22 billion.
The jump to $35 billion in 2024 represents a substantial increase in a single year. Average deal size rose to $45 million, with late-stage rounds accounting for the bulk of activity. The biggest single bet came from Anduril, which closed a $1.4 billion Series F in 2024.
That round alone exceeded the entire sector’s annual fundraising total as recently as 2017.
The players and the Pentagon pipeline
The surge has drawn in major tech venture firms alongside more politically connected entrants. Andreessen Horowitz launched a dedicated defense-focused fund in 2023. A newer entrant, 1789 Capital — founded by Donald Trump Jr. and Eric Trump — has allocated an estimated $500 million to defense technology investments, according to the PitchBook report.
The technical reality driving these flows is straightforward: the Pentagon has made emerging technology a budget priority. The Department of Defense’s research, development, test, and evaluation budget reached $130 billion in fiscal year 2025, a substantial increase over FY2020.
That spending is explicitly directed toward artificial intelligence, hypersonics, and unmanned systems — the same categories where venture-backed startups are building products. The Defense Innovation Unit, established in 2015, has created streamlined acquisition pathways that allow smaller companies to compete for contracts that once went exclusively to prime contractors. As ever, the detail that matters is the speed of the contracting pipeline: shorter procurement cycles mean faster revenue for startups, which in turn attracts venture capital seeking exits within fund lifetimes.
The failure rate the pitch decks don’t mention
For all the momentum, the sector carries structural risk that the fundraising numbers alone obscure. A 2023 study by the Center for Strategic and International Studies found that 40 percent of defense technology startups fail within five years. That figure is a reminder that the Pentagon’s procurement system, while evolving, remains a demanding customer with specific requirements, long sales cycles, and political vulnerabilities.
The defense tech boom is not a monolith. The late-stage dominance of the 2024 figures suggests that capital is concentrating in established players rather than spreading evenly across the startup ecosystem.
Anduril’s $1.4 billion round accounted for a significant share of the year’s total, and the average deal size of $45 million points to a market where early-stage companies may find it harder to attract attention. What to watch next is whether the Pentagon’s RDT&E budget trajectory sustains the current pace of private investment. A substantial increase over five years is evident, but defense budgeting is subject to congressional appropriations cycles that can shift with each administration.
The same political dynamics that opened the door to streamlined acquisition through the DIU could just as easily tighten procurement rules in response to cost overruns or contractor failures. For now, the capital is flowing.
The Trump sons’ 1789 Capital has positioned itself at the intersection of political networks and defense technology, and the broader venture industry is following the same signal: the Pentagon is buying, and it wants to buy faster.
