When thinking about defense technology companies, investors may immediately think about companies that build tanks and guns for the government, but there are many defense technology companies that supplement the industry with their technology and products. Companies like Anduril and Palantir might come to mind first when thinking about defense technology but other companies like Dataminr and Gecko Robotics have partnerships with the U.S. government and the military to supply real-time data and inspect products. Learn more about the growth of the defense technology industry, some key players, and what the future could look like for this industry.

Defense Technology

Industry Growth

The defense systems industry has been growing for many years and has become very broad, encompassing more than companies building tanks and guns. The global aerospace & defense market was valued at $855.62 billion in 2023 and is expected to grow to $1076.56 billion in 2027 at a compound annual growth rate (CAGR) of 5.9%.[1]

Within the aerospace and defense industry, there are multiple segments within the industry, including defense equipment, software and artificial intelligence, and defense cybersecurity.

Defense Equipment

The defense technology industry encompasses the traditional military vehicles and weapons many associate with the industry. Valued at $517.2 billion in 2023 and projected to grow to $762.1 billion by 2032,[2] it has been witnessing a shift towards collaboration between the public and private sectors. Governments have been forging partnerships with tech companies to accelerate innovation and enhance capabilities. Initiatives like the U.S. Department of Defense’s Defense Innovation Unit (DIU) exemplify this trend, aiming to bring cutting-edge commercial technologies into the defense realm more efficiently.

Artificial Intelligence

Artificial intelligence can play an important role in defense efforts by providing the software needed to power surveillance and reconnaissance missions. By leveraging predictive maintenance, AI may be able to help prevent unplanned equipment failures and minimize downtime by predicting when parts require servicing before they malfunction. Furthermore, AI could help support better decision-making by delivering actionable insights via data analytics, resulting in more efficient operations, lower costs, and improved resource management. Valued at $22.45 billion in 2023, the segment is expected to grow at a CAGR of 9.8% to 2030.[3]

Defense Cybersecurity

As technology advances in military operations, the surface for attacks may ultimately expand, allowing more space to exploit vulnerabilities. With the proliferation of the internet, cyberthreats have emerged providing another avenue beyond the battlefield. To ensure that these threats can be contained, many defense organizations around the world are using the increase of threats to invest more heavily in cybersecurity measures. The constant need to innovate and enhance cybersecurity capabilities is a main driving force in this industry, which was valued at $36.9 billion in 2023.[4]

Key Players Shaping the Industry

The following are MicroVentures portfolio companies that are developing technologies surrounding the defense technology industry, helping to drive the overall growth in the industry.

Anduril

Anduril Industries is a defense technology company that specializes in developing advanced systems designed to enhance national security. Founded in 2017, the company leverages cutting-edge technologies such as AI, machine learning, autonomous systems, and advanced sensors to create next-generation defense solutions. It has developed a suite of software solutions for surveillance, tracking, and threat identification in addition to defense drones, land vehicles, and underwater vehicles to defend against threats.

Holding notable partnerships and contracts with the U.S. Department of Defense, the U.S. Department of Homeland Security, the Australian Defense Force, and the U.K. Ministry of Defense, Anduril has delivered its products to aid in defense efforts globally. With a goal of transforming data to decisions to actions, Anduril is poised to be a leader in the defense industry and is reportedly considering an IPO within three to five years.

Palantir

Founded in 2003, Palantir Technologies is a software company that specializes in big data analytics and provides advanced tools for data integration, analysis, and visualization to organizations in government, defense, and the private sector. Their flagship platform Palantir Gotham, is designed to centrally manage intelligence gathering and target identification, leveraging a shared and access-controlled common intelligence, operating, and targeting picture to visualize the order of battle.

Most recently, Palantir has partnered with Anthropic and AWS to provide U.S. intelligence and defense agencies access to the Claude 3 and 3.5 models of AWS. In addition to this partnership, Palantir has also partnered with the U.S. Department of Defense and the United States Intelligence Community. Palantir is committed to building software solutions engineered to power integrated deterrence and enduring advantage for the U.S. and its allies.

Pyka

Founded in 2017, Pyka aims to reduce the environmental impact and operational costs associated with traditional aviation by leveraging cutting-edge technologies in autonomy, electric propulsion, and aerospace design. Pyka is working with multiple government agencies to explore operational use cases for its technology to address the most pressing challenges in the Department of Air Force and AFWERX.

As of February 2024, Pyka is working with AFWERX and the Sierra Nevada Corporation to develop a large-scale autonomous electric cargo aircraft to deliver to the U.S. Department of Defense. Pyka is working with the government on its RUMRUNNER, a modified version of Pyka’s electric Pelican Cargo, for military sustainment operations, presenting opportunities to increase the survivability of our service members, reduce risks to the force, and transform the way military operations have historically been conducted.[5]

Gecko Robotics

Founded in 2013, Gecko Robotics is a technology company that specializes in developing advanced robotic systems for industrial inspections and maintenance, particularly in high-risk environments such as power plants, refineries, and chemical facilities. Gecko Robotics has formed partnerships with the U.S. military and defense contractors to apply its advanced robotic inspection technologies to military assets.

Their platform, Cantilever is changing the dynamic of collecting data on ship structures through robotic collection, digital encoding, localizing inspection, and reducing growth work by hundreds of days and remediation costs by more than 50%.[6] With high-quality material health data on critical assets, Gecko can help improve strategic investment decisions and optimize maintenance processes, contributing directly to national security.

Dataminr

Founded in 2009, Dataminr’s technology is used to help military and intelligence agencies detect and respond to emerging threats by analyzing vast amounts of unstructured data from sources. Its First Alert platform for the public sector provides global defense organizations with real-time alerts on breaking events to allow for faster response and better protection of their troops and critical infrastructure.

Dataminr has formed a notable partnership with the U.S. government and NATO to provide real-time, AI-driven alerts and intelligence across a range of national security and crisis management scenarios.[7] Dataminr is a leading provider of real-time AI-driven data analytics, specializing in transforming publicly available data into actionable intelligence.

The Future of Defense Technology

The defense technology industry is poised for continued growth. As global conflict continues, defense technology is expected to continue to grow and play an important role. Additionally, the increasing focus on space as a domain of warfare is leading to investments in satellite technology and space-based defense systems.

Artificial Intelligence

Innovations such as artificial intelligence, drone technology, and autonomous systems are transforming traditional defense strategies. AI is helping to revolutionize data analysis and decision-making processes, allowing for more efficient operations, and enhanced situational awareness. Meanwhile, UAVs are being deployed not only for surveillance but also for tactical strikes, reshaping the battlefield landscape.

Cybersecurity

As warfare becomes increasingly digital, cybersecurity has emerged as a critical focus for defense agencies. The rise of cyber threats has led to substantial investments in securing networks and critical infrastructure. This emphasis on cybersecurity is creating a market for companies specializing in protective technologies, ranging from advanced encryption methods to sophisticated threat detection systems.

Defense Privatization

The defense technology industry has been in the government’s hands for a long time, meaning that only government companies have been able to access funds to develop products and platforms in the defense industry. Recently, with the rise of private startups beginning to bid on these government contracts, there has been an upward trend of products and platforms being developed. Private companies may be able to scale faster with venture capital funds and private equity and not get stuck in the bureaucracy of government development that can limit innovation and execution.

Final Thoughts

The defense technology industry has been and continues to be on an upward growth, with projected growth at a CAGR of 9.8% from 2024 to 2030.[8] MicroVentures portfolio companies like Anduril, Palantir, Pyka, Gecko Robotics, and Dataminr have become some of the key players in the defense technology industry. Finding solutions to increase efficiency in defense technology can be beneficial to the U.S. government long-term, allowing the military to be better equipped to handle threats in the future.

Want to learn more about key industries to keep an eye on? Check out the following MicroVentures blogs to learn more:

• The Sky’s the Limit: Drones and Autonomous Vehicles
• The AI Wave: The History & Growth of the Semiconductor Industry
• The Final Frontier: The History and Growth of Space
• Powering the Future: Investing in Artificial Intelligence Startups
• The Biotechnology Revolution: Driving Advancements in Precision Medicine

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[1] https://www.globenewswire.com/news-release/2023/04/21/2652042/0/en/Aerospace-Defense-Global-Market-Report-2023.html

[2] https://straitsresearch.com/report/defence-equipment-market

[3] https://www.grandviewresearch.com/industry-analysis/artificial-intelligence-ai-aerospace-defense-market-report

[4] https://www.marketsandmarkets.com/Market-Reports/defense-cybersecurity-market-58503277.html

[5] https://www.flypyka.com/press-releases/pyka-and-snc-partner-to-offer-large-scale-all-electric-cargo-uas-to-u-s-department-of-defense

[6] https://www.geckorobotics.com/defense

[7] https://www.dataminr.com/press/dataminr-expands-partnership-with-nato-to-provide-ai-powered-real-time-alerts-for-global-force-and-infrastructure-protection/

[8] https://www.grandviewresearch.com/industry-analysis/artificial-intelligence-ai-aerospace-defense-market-report

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