Silicon Valley Defense Tech Can’t Wait For Trump To Get Started

Forbes

With Elon Musk’s potential involvement in a new Trump administration, Silicon Valley’s defense leaders hope the $800 billion Department of Defense budget will be unlocked for tech startups.  Read the full story on Forbes: https://www.forbes.com/sites/davidjeans/2024/11/07/silicon-valley-defense-tech-cant-wait-for-trump-to-get-started/  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00Today on Forbes, Silicon Valley defense tech can't wait for Trump to get started.

00:07The impending arrival of a second Trump administration has brought renewed excitement for Silicon

00:12Valley's ambitions to make weapons and secure the large contracts needed to support them.

00:18Speaking on CNBC this week, Enderal co-founder Palmer Luckey, who hosted a fundraiser for

00:23Trump and donated to Republicans, said, quote,

00:27Trump is a change candidate.

00:28He very much wants to balance the budget and save money.

00:31Get more for less.

00:33Trump is not going to politicize the defense procurement apparatus.

00:38The defense tech space has become a major investment sector in recent years, driven

00:42by the wars in Ukraine and the Middle East, rising tensions with China, and fears that

00:46the U.S. military will fall behind China and Russia in the development of cutting-edge

00:51military technology.

00:53Companies like SpaceX, Palantir, and Enderal dominate the sector, and funds set up by major

00:59venture capital firms like Andreessen Horowitz, General Catalyst, and 8VC have spawned a growing

01:05number of unicorn-valued companies making drones, autonomous boats, and weapons of war.

01:12Shares in Palantir, among the highest-profile defense tech companies, soared 8.61 percent

01:17the day after the election, contributing to a 40 percent spike from Monday to Friday during

01:21trading last week.

01:23Congratulating Trump on X, the company said it, quote,

01:26stands ready to work with Trump to bring the software revolution to our most important

01:30institutions.

01:33Much of the enthusiasm has centered around the growing influence of Elon Musk on Trump's

01:37policies and speculation that he may take on some government role.

01:41Boosting Palmer Luckey on X Wednesday, Elon Musk wrote that it is, quote,

01:46very important to open DoD-slash-Intel to entrepreneurial companies like Enderal, pay

01:51for outcomes, not requirements documents.

01:55Nathan Mintz, CEO of electronic warfare company CX2, and a previous co-founder of unicorn

02:01defense company Epirus, said, quote,

02:04The close relationships between Vice President-elect Vance, Elon, and the defense VC and startup

02:09ecosystem will create a huge opening for real defense acquisition reform and widening of

02:14a number of players.

02:17Another founder, JC Batesh of fusion company Fuse, said, quote,

02:21Seeing Elon Musk getting involved and backing the Trump administration gives me hope that

02:26there will be positive progress and benefits to the defense tech ecosystem.

02:31In addition to Musk, other Silicon Valley leaders with major defense interests have

02:35aligned themselves with Trump and earned his ear.

02:38Marc Andreessen, whose eponymous venture firm invests in defense tech startups through its

02:43American Dynamism Fund, has been an outspoken advocate for Trump, touting his policies as

02:48favorable to innovation.

02:50Others include Jacob Helberg, an advisor to Palantir, who has spent much of this year

02:55advising Trump's campaign on AI policy, and investors Joe Lonsdale of 8VC and Sean

03:01McGuire of Sequoia.

03:04A major challenge for defense tech startups has been selling to the Pentagon.

03:08Many emerging companies secure small R&D contracts, but often struggle to overcome

03:13the so-called Valley of Death by securing major years-long programs of record before

03:18capital dries up.

03:20Less than 1% of the Pentagon's contracts were reportedly awarded to venture-backed companies

03:24during the fiscal year ending 2023.

03:28With Musk's input, Silicon Valley defense leaders believe Trump will upend and reallocate

03:34the $800 billion Department of Defense budget, much of which is vacuumed up by contracts

03:39to large prime contractors such as Lockheed Martin, Northrop Grumman, and RTX.

03:45One venture capitalist with defense investments told Forbes,

03:49There's been bipartisan consensus that we need to shift from buying costly, big exquisite

03:53stuff from primes, as opposed to cheap autonomous weapons from emerging companies.

03:58Any Trump administration will encourage the Pentagon to act faster.

04:03For full coverage, check out David Jeans' piece on Forbes.com.

04:09This is Kieran Meadows from Forbes.

04:11Thanks for tuning in.

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