How VC is Busting the Military Industrial Complex — For its Own Benefit

Ties between big finance and the weapons industry are not new. The first venture capital firm in the U.S. was founded to profit from new technologies developed for use in WWII, and the role of military spending in turning Silicon Valley into a tech hub is well documented.

But today’s biggest VC titans are making transformative investments in military technology that pose serious consequences far beyond another hype-driven tech bubble. Weaponizing their financial assets to expand the production of war material will not only divert technological resources away from other critical domestic priorities, but also forge novel devices of warfare that will generate demand for battlefield testing grounds both at home and abroad.

But before the defense tech evangelists can resurrect the age of American global supremacy, they must transform the way the Pentagon does business. This involves seducing Pentagon planners with exotic promises ranging from “attritable autonomous systems” (or swarm) technology to subscription models for weapons systems — not because these fit some strategic framework but because they align with the VC business model.

Venture capital and private equity is about making limited investments in mobile assets (technologies, engineers) to get a startup to the IPO stage (or trim the fat from an existing operator) and cash out. This is at odds with a military industrial complex that boasts millions of employees and a handful of oligopolistic firms with billions of dollars of permanent infrastructure, huge up-front costs, long time horizons, and extremely complex procurement processes.