How Silicon Valley's 'Neoprimes' Are Disrupting the $38B Defense Industry

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The Rise of Defense Tech 'Neoprimes'

A wave of defense tech startups in Silicon Valley is drawing billions in funding and reshaping America's national security landscape. Companies like Anduril Industries - recently valued at $30.5 billion - are emerging as "neoprimes," challenging the dominance of legacy contractors known as "primes" such as Lockheed Martin, Northrop Grumman, Boeing, General Dynamics, and RTX.

"There's more money than ever going to what we call the 'neoprimes'," said Jameson Darby, co-founder of investment syndicate MilVet Angels. "It's still a fraction of the overall budget, but the trend is all positive."

Other prominent examples include SpaceX and Palantir Technologies, which are part of this new wave of defense innovation. Unlike traditional primes, these startups are faster, leaner, and software-first, focusing on closing "critical technology gaps that are really important to national security," according to Ernestine Fu Mak, co-founder of MVA.

Massive Funding Momentum

Venture funding for U.S.-based defense tech startups totaled approximately $38 billion through the first half of 2025, and could exceed its 2021 peak if the current pace continues. This represents a significant shift in how national security technology is developed and funded.

The Changing Battlefield

'The Battlefield Is Changing'

As global warfare evolves, the U.S. Department of Defense has identified several critical technologies essential to national security, including:

• Hypersonics
• Energy resilience
• Space technology
• Integrated sensing
• Cyber capabilities

"In a post-9/11 world, the entire Department of Defense effectively focused on the global war on terrorism," explained Darby. "But war today is more focused on 'great power competition.'"

"The battlefield is changing and new technologies are needed... warfare no longer being limited to land, sea, air. There's also cyber and space domains that have become contested."

Ernestine Fu Mak, Co-founder of MilVet Angels

This shift has created opportunities for dual-use technologies that can be applied both commercially and by militaries. "Things like artificial intelligence and autonomy have broad, sweeping commercial applications, but they're also clearly a force multiplier in a military context," said Darby.

The 'New Guard' Emerges

Building the Defense Ecosystem

MilVet Angels recently emerged from stealth mode after quietly backing leading defense tech startups since 2021. The syndicate's approximately 250 members include tech founders, Wall Street financiers, company executives, intelligence officials, former military leaders, and Navy SEALs.

They've invested in companies like Anduril Industries, Shield AI, Hermeus, Ursa Major, and Aetherflux, creating what Mak calls the "new guard" - a coalition of individuals bringing technical expertise, deep mission focus, and complementary talents to national security.

"Modern national security requires both the warrior's insight on the battlefield and the builder's drive for innovation," Mak emphasized.

Deterrence Over Conflict

Both Mak and Darby stress that the goal of defense tech innovation isn't to initiate conflict but to create credible deterrents. "No one in defense tech is looking to wage war," Mak clarified. "Rather, it's looking to deter it and wanting adversaries to think twice before threatening peace and stability."

This new generation of defense companies represents a fundamental shift in how technology, investment, and national security intersect, with Silicon Valley's innovation culture meeting the strategic needs of modern warfare.