Obstacles Facing Military Technology Startup Incubators

🚨 I have looked at more than 500 defense startup pitch decks in the past four weeks. Here are some of the most worrying patterns 👇 Unacceptable company structure: - Set up without OpSec in mind (hat tip to Quirin Herz for the impulse today). - Complex cap-table, intransparent shareholder structure (e.g. layered/nested), ties to unfavorable countries. - High debt/convertible debt. No technological moat: - Product made out of COTS components and open-source software. - No data pipeline advantage. - No credible multi-scenario algorithmic/ML/AI superiority proof (navigation, delivery...). No initial business model: - False assumption to be able to go from zero to system; trying to sell an ecosystem that does not yet exist. - Selling complex C2 systems that duplicate functionality. - False assumption that customers will want the whole system right away, vs. the vore technology. - False assumption of selling directly to MoDs. - No tier-2 and tier-1 sales strategy. - "Build it and they will come" attitude in red-ocean/saturated markets (e.g. drones). - Underestimation of and lack of atomization of sales cycles. No full-scale business model: - Selling features instead of solutions. - No ecosystem/system-of-systems strategy. - Too much focus on VC/no debt strategy. - Lack of focus on production scaling challenges. Lack of understanding about defense systems: - Standards, certifications, regulations. - IT integration. - C2 integration. - No CONOPS (concept of operations) contextual knowledge. Missing customer/user feedback: - Qualitative issues (qualification of the issuers, covered parameters, no battlefield feedback when it would be preferential and possible). - Quantitative issues (e.g. single squad/commander/lieutenant). - A WhatsApp video of a soldier saying this is good is not sufficient customer/user feedback. No contextual CONOPS understanding: - Every existing technology has an operational and tactical concept and context. - Your technology must fit into these concepts and contexts. - Seek feedback like "This is great, but I we can't integrate this into our logistics chain because xyz", improve. TRL mismatch: - Be honest to yourself. - If it is TRL 2, don't burn bridges by selling it as TRL 8. - 🤫 Plus 1-2 is okay, more makes you seem less credible. Lack of requirements-reading competence: - If you apply for calls, tenders or challenges, read every bit of the requirements, then read them again. - Address the points which you might not fulfill to 100% up-front; it shows that you have done your homework and know both the potential customer/investor and your product. - Instead of explaining to the customer why they are wrong, have ideas for how to improve the CONOPS with your technology. Think yes, and instead of no, but. There's so much more to cover here, but I'll stop for now. Aerospace & defense is a complex, confusing and intimate industry. I hope this helps some engage in a more meaningful manner. Let's keep grinding 💪

Thinking of entering defence? Good. But read this first, or get crushed. You’re not building a startup. You’re entering a war zone with Excel sheets instead of bullets. And here’s the first landmine: Defence doesn’t care about you. Not until you matter. And by the time you matter, it might be too late. So here’s your brutal, field-tested playbook 👇 🔻 1. Run a Dual-Use Strategy or Die Trying Don’t “pivot into defence.” Don’t “add military as a target customer.” Build something with teeth in both markets — or you’ll starve while waiting 24 months for a MoD reply. Dual-use = survival. Omni-use = dominance. 🔻 2. Your Actual Competitor? Paper. You're not fighting primes. You're fighting outdated workflows, 94-page requirement PDFs, and evaluation committees who’ve never used the tech. You’re not selling innovation. You’re selling the idea that innovation should exist. 🔻 3. Never Ask for Feedback — Ask for Budget Lines Everyone will “love” what you’re doing. They’ll invite you to panels, workshops, incubators. None of that pays your team. Ask: “Which budget pays for this in Q4?” If they can’t answer, walk. 🔻 4. Find a Uniformed Insider, or You’re Screwed No matter how good your pitch is, you need a believer inside the system. Someone who speaks procurement and can say, “This solves my mission.” Without that: enjoy limbo. 🔻 5. If You’re Not Testable, You’re Not Real Defence doesn’t buy PowerPoints. You need a testable MVP fast. No test = no traction. No traction = no procurement route. No route = you're just theatre. 🔻 6. The First Deal Will Break You It’s slow. It’s painful. It’ll take months, maybe years. But once you break the wall once, you become “pre-approved.” Then the real business begins. 🔻 7. Ignore All of This If You're Building Slideware This advice is only for builders. For founders ready to live in uncertainty, raise from niche VCs, and get 50 no’s before one test flight. If you're not all-in: stay in SaaS. This is the most misunderstood opportunity of our time. Europe is waking up. The U.S. is doubling down. And the next industrial revolution will wear camouflage. Startups who learn the terrain will dominate. Speed. Testability. Dual-use. Insider access. That’s your survival kit. Use it. #DefenceStartups #DualUse #InnovationInDefence #OmniUse #MilitaryTech #InsiderIntel #BoldMovesOnly #WakeUpEurope

Reality Check As a founder and former warfighter, it’s painful to watch what's happening in defense tech. This isn’t a game like it is in the commercial sector; young men and women are the ones who pay the ultimate price for these missteps. ....................................................................TLDR........................................................................... Is it just me or did we set out to fix what the primes got wrong: slow delivery, inflated contracts, and tech that doesn’t work where it matters. But now, a lot of the venture-backed “defense unicorns” are falling into the same traps, just with slicker branding and a faster burn rate. Let’s be honest: 🔹 Anduril — Traction driven mainly by M&A. But M&A isn’t innovation. Failures in Ukraine and Project Convergence raise genuine concerns about operational readiness. Just named as the go-to edge hardware provider by Palantir—unsurprisingly, both come from the same investor pool. 🔹 Epirus — Recent down round. Constant leadership changes. Difficult to build end-user trust when the internal story is constantly shifting. Limited information on product traction… 🔹 Shield AI — One of the most mission-driven teams out there. But struggling under the weight of trying to meet software-style VC expectations in one of the hardest, longest-cycle domains. 🔹 Rebellion Defense — Strong vision and DIU roots. But disconnected from the user community. Ultimately, hasn't found product-market fit and has shrunk rapidly. 🔹 Palantir — Despite the narrative, their “AI platform” is mostly just ATO'd legacy infrastructure. There is very little real innovation, and now they’re acting as a barrier to startups, rather than a bridge. When your platform becomes the system of record, you control the gate. That slows the ecosystem down, not up. 💬 The common thread? The capital isn’t always going where it needs to. And the only people that really hurts… are the warfighters and end-users. This isn’t about bashing startups. The talent is real. The intent is genuine. However, we’re witnessing a new kind of gatekeeping emerge—and it’s coming from the same investors and vendors who claim they’re here to “disrupt.” If we’re serious about building the future of defense, we need: ✅ Founders who know the mission ✅ Investors who understand the mission ✅ Teams that build with the warfighter, not around them ✅ And platforms that enable innovation, not own the stack No more Primes 2.0, we need 20+ Neo-Primes, not just adding two new ones No more innovation theater. Defense innovation isn't broken because of a lack of good ideas. It's broken because capital, leadership, and incentives are misaligned with the needs of the warfighter. We need to do better — because the warfighter deserves better. Curious to hear from others in the defense space: -Investors -Warfighters -Industry -Startups

I recently spoke on a Defense Tech Panel in the Russell Senate Office Building. Here are 5 non-intuitive defense tech Investment Risks I shared: 1) Peace Risk 2) Maginot Line Risk 3) Stockpile (O&M) Risk 4) Contracting Risk 5) Weapon Warfare Fit Risk > “Peace Risk” – Deterrent quantities are less than combat quantities. If the business case for the platform you’re funding or building requires a war to break out with a high turnover of units due to combat losses, you must assess the likelihood and timing of that war. Alternatively, if your technology gives an adversary strategic pause, you must understand the minimum viable quantities DoD will purchase (and implied revenues). That's what they will buy. > “Maginot Line Risk” – Few flag officers tasked with fighting the next war were promoted because they had some brilliant strategic or tactical insight that fundamentally reshaped warfare. Instead, they were promoted for doing exceptionally well in their Military Occupational Specialty that likely hued to established and proven tactics.  This is a feature, not a bug, of the system. Bet the country technologies need a lot of proof, especially for front line operators. If your startup technology only works under a new paradigm of warfare, will the Generals and Admirals tasked with using it actually deploy it in a novel way? In the absence of the forcing function of combat, do you trust Flags to see its potential and order their traditional forces to entirely retrain to an unproven combat approach? > “Contracting Risk” – Government Procurement can stay insane longer than your startup can stay solvent. A one year delay in an appropriation is just another Monday in Washington. For startups with 12-18 months of runway, it is existential. Is that promised Congressional approp going to your company and not someone else, even if you did all the leg work? How do you know? > “Stockpile (O&M) Risk” –The Operations & Maintenance part of the DoD budget exceeds the R&D and Acquisitions budgets…combined. A lot of massed, swarming technology would be awesome on Day One of a conflict. But if that conflict is 5 or 10 years off, what is the likelihood USG is going go buy massive quantities, store them indefinitely (and where?), then devote resources to keep them maintained and current? > “Weapon Warfare Fit Risk” – Many hard tech companies claim “dual use.” However, government customers need very different things than the commercial sector. Commercial cross-overs may not be sufficient in the crucible of combat. The go-to-market and product development motions for commercial and government customers are so different, you will end up running two different P&Ls to service both. The resources required may only be available once you have solid traction in one or the other.   In short, know the risks you are buying! Deep appreciation to Nate Walton and Thomas Hendrix for hosting and inviting me.

Five months ago I thought the hard part was building a radar system that actually works. It isn't. We've demonstrated live drone detection and track continuity in cluttered outdoor terrain. That part, while genuinely difficult, is solvable with the right team and enough field time. The hard part is the gap between "your technology works" and "we'll sign a contract." Here's what that gap actually looks like, from our experience talking to port operators, airport security teams, and government procurement officials across Europe: They want evidence from an environment like theirs. A lab demo doesn't move the conversation. An outdoor field test does, but only if it resembles their specific site and operating conditions. They want to know what failure looks like. Not just "what does your system detect" but "what does it miss, and how often, and why." Buyers who've been burned by overselling are very good at this question. You need an honest answer ready. They want a reference. Not a press release, a human being at another site who will take a call and describe their experience. Building the first reference is the hardest thing a deep tech startup does. None of this is a criticism of the buyers. They're right to ask these questions. It's a reminder that building a deep tech company isn't just a technology problem. It's an evidence accumulation problem. Mark III is our answer to all three: pilot-grade hardware, documented field performance in a real environment, a reference site. We're not there yet. But that's what we're building toward, one field test at a time. #DeepTech #Defence #Founder #EuropeanStartups

Stop building defence startups without understanding defence markets. This may sound harsh, but it needs to be said. I meet many innovators and founders who want to “enter defence.” The ambition is there. The pitch decks are polished. But the strategy often isn’t there. Too many solutions are built with a single local market or own idea in mind. The assumption is that if something works in one country, it will naturally translate elsewhere. It rarely does. Defence markets are shaped by different doctrines, procurement systems, command structures, policies, industrial ecosystems, security requirements, and CULTURES. What resonates in one country can fall completely flat in another. Without understanding how to bridge those differences, market entry attempts almost always fall short. Another challenge is funding. Much of the funding available to early-stage defence innovators is still very local. Many investors have limited understanding of what building a defence capability for international markets actually requires. Questions often focus on familiar local startup metrics that simply do not apply. Defence is not a burger joint. It's a long game built on credibility, trust, integration, survivability in environments where failure has real consequences. Which leads to another recurring problem: positioning. “We build drones.” “We do AI.” “We provide autonomy.” That is not a capability description. Who is the operator? What mission problem are you solving? Where does the system integrate? How does it survive electronic warfare? How is it secured, governed, sustained, and supported? And most importantly: Why should anyone trust it when lives depend on it? Vagueness does not survive contact with defence reality. Commanders don't want snake oil. They want systems that work inside real operational ecosystems. That often means partnerships, integrations, logistics chains, doctrine alignment, years of credibility-building. This is where expectations frequently collide with reality. Access is not automatic. Trust is not immediate. Adoption does not happen in quarters. It takes years. What works today isn't automatically what another military is looking. Every environment has its own operational constraints, political context, integration requirements. Which means building for defence requires something many startup ecosystems underestimate: homework. Understanding the environment, the user, the system you are entering. Defence is never a one-way street. Collaboration is never a one-way street either. To receive access, insight, partnership, you also have to bring something meaningful to the table. The innovators who succeed are rarely the loudest but ones who listen first, ask the hard questions, spend time understanding operators, integration realities, mission constraints, the broader ecosystem before building the narrative. Because in defence, buzzwords don't matter. Survivability does. #DefenceInnovation #DefenceTech #NoBuzz

Real talk: Most defense tech startups are building solutions for problems they don't understand. And almost all will fail. Investors care about the money they lose, but the thing that keeps me awake at night is the opportunity cost of time. Time warfighters spend waiting, time companies and contracting officers spend trying to make it work, time everyone spends at conferences trying to sell a round peg for a square hole. This is what Evergreen is built to solve. Why? Most companies are on a road to nowhere. I've watched countless promising defense tech startups die before they run out of money for a surprisingly consistent reason: They build products based on hype rather than actual national security needs. They read a headline about drone swarms or AI targeting systems and rush to develop a solution without truly understanding the problem. This round-peg, square-hole problem is exacerbated by applying the Silicon Valley mentality to the defense industry, which doesn’t operate like a typical tech market. In defense, the most pressing problems are often classified, the real requirements aren't publicly available, and the feedback loops that startups typically rely on for product iteration simply don't exist in the same way. When your target customer operates behind layers of security clearances and procurement regulations, it’s not as easy to just "move fast and break things." So what's the solution? Start with the problem owner, not your perception of the problem. This approach isn't easy. It requires thoughtfulness, persistence, and a willingness to run the gauntlet over and over and over again. But it's the only reliable path forward in an industry where the rules are changing in-flight, you rarely get second chances, and the consequences can be deadly. Fall in love with the problem, not the solution. They fly, fix, fly…again and again and again…as fast as you can. This is how we win.

 "...in cybersecurity, 523 currently active firms have raised a total of $43 billion; in fintech, 416 startups have secured $19 billion. But defense tech? A mere 176 startups have raised just $1.58 billion, according to Start-Up Nation Central's data platform. "Israel needs to bridge the divide between Startup Nation innovation and military might," says Hamutal Meridor, a Unit 8200 veteran and former Palantir Israel GM. "If it does, it could emerge stronger and smarter. But tough bureaucracy can stifle the entire sector." Take Moshik Cohen, PhD, a rocket scientist behind some of Israel’s top missile defense systems. In 2019, he developed an autonomous situational awareness system for tanks. The Defense Ministry's response? Thanks, but no thanks, there’s no need for this. Now, Israeli tanks in Gaza and near the Lebanese border face the very threats Cohen's system was designed to counter. “Before this war, there was almost no room for Israeli startups in the defense establishment. Our defense system is broken. From strategic management, through procurement and equipment, to politicking, as a system, it’s broken,” Cohen warns.

What are the top barriers companies face to starting up and scaling up in the Department of Defense? That was the impetus for a large research project Jeff Decker and I recently took on. The WSJ just published an article titled "Defense Startups Risk Becoming ‘Failed Experiment’ Without More Pentagon Dollars." But spoiler alert: it's not just the money preventing companies from scaling! This morning we published the findings from our n=859 survey - the article is now live in the Texas National Security Review! Key findings below - check out the links in the comments for a complete breakdown on the survey, the findings, and our recommendations: 1) Partnering with different types of companies requires different tactics. 2) Defense Department partnerships with new entrants to the federal market often falter because companies and buyers are disconnected. 3) New entrants are unprepared to meet federal government requirements like technical certifications (e.g., airworthiness) or licensing requirements (e.g., authority to operate), which can impede technology transition and cause delays in award. 4) The U.S. government’s overly assertive stance on intellectual property rights delays awards and shrinks the pool of companies willing to sell to the Defense Department. 5) The difficulty companies face in obtaining security clearances and accessing physical and virtual classified environments limits the U.S. government’s exposure to new or commercial capabilities.

Maggie G. at Shield Capital and Gleb Shevchuk at drone startup Neros Technologies, provide an eye-opening and informative case study of what it takes to build hardware for DoD. Neros is one of the platforms on the Defense Innovation Unit (DIU)'s Blue UAS list, a vetted list of commercial drone platforms that meet the DoD's cybersecurity, supply chain, and operational standards. Basically, compliance with NDAA standards required Neros to design nearly all its own components. "During the first month or so of Neros, like a lot of others in the FPV drone world, started by using off-the-shelf components, many of which were built around cheap, widely available Chinese electronics. But it quickly became obvious that if we wanted to meet the NDAA's compliance standards, we'd have to rip most of those Chinese made components out and start from scratch." Actually, being on the Blue UAS List still doesn't mean that nothing comes from China, because some components are impossible to source outside China. This includes motors, cameras, as well as carbon fiber frames. Another challenge is hardening & testing. "Hardware systems need to reliably work even after being dropped out of an airplane, deployed in the middle of a rainstorm or sandstorm, or jammed with enemy electronic warfare devices, and that takes a lot of testing." Also, "MIL-SPEC standards were developed for large, multi billion-dollar weapon systems that are too important and expensive to lose. FPV drones, in contrast, cost less than $5000 and don't need to last 10 years. They don't even need to survive their mission. That shift in mindset hasn't caught up across the board, and it's part of the reason why DoD procurement is still slow and expensive." It's easy to underestimate these very real obstacles. In addition to those above, the article details further challenges of Electronic Warfare Hardening and Integration & Modularity. All of these have a direct impact on supply chain, cost, performance, and manufacturability for defense tech startups. https://lnkd.in/emhB5tBA #defensetech #UAV #drones #defenseindustry #defensemanufacturing #defenseinnovation