The Pentagon Wants to Give Defense Startups a Chance

In May 2023, investors from a dozen of Silicon Valley’s largest venture capital firms descended on a spartan brick building next to a defunct naval base in Mountain View, California. The outpost houses the Defense Innovation Unit, an office that works with startups hoping to do business with the Pentagon. The investors were guests of Doug Beck on his first day in charge of the DIU, and they had grievances to air.

Since its inception in 2015, the DIU has handed out 62 contracts worth $5.5 billion to startups, in deals for products including autonomous drones and cybersecurity software. Many of the investors who showed up to talk to Beck backed companies that had landed those deals. They complained that the DIU often gives grants for technology pilot programs that take too long to develop into full-scale contracts or, more often, never go anywhere. The poor chances of success were damaging to the startups, which couldn’t build businesses on one-off checks. It was also worrying to people in the Pentagon, who think the US military needs to cultivate startups to deal with a rapidly evolving technology landscape.