National Defense Magazine: A Roadmap to Leverage Private Investment to Support Defense

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Effectively tapping into private markets and expertise to meet current and future defense needs will require bold new strategies to de-risk growth and scaling for emerging companies in hardware industries and to promote attractive investment options in hardware innovation.

As outlined in the inaugural National Defense Industrial Strategy, a modernized defense industrial ecosystem must include a resilient and flexible industrial base, encompassing manufacturing, supply chains and logistical systems.

Addressing these priorities and delivering a wide variety of capabilities to the nation’s warfighters at speed and scale will require a collaborative mix of government funding and substantial private investment.

Private markets represent an under-utilized capital base that can be deployed in a multitude of ways and faster than traditional government funding. The ability to tap into this community is vital for startups and innovation-focused companies that grow and thrive by rapidly developing and deploying emerging technologies to meet market needs.

Innovators and startups in the technology hardware sector — defined as companies focused on tangible products rather than software — frequently encounter challenges in obtaining funding to scale successfully.

A 2017 study by CB Insights found that 97 percent of hardware startups closed their doors within the first five years of operations, often after failing to secure a second round of funding. This is no surprise when considering that hardware startups are one of the least funded sectors by far, only receiving 8.9 percent of all venture capital invested in 2023, a six-year high…. Read the full article on NationalDefenseMagazine.org