Tracking the Growth of VC Investment in Defense Tech
it's a rising tide...
The venture capital (VC) landscape for defense technology has demonstrated stability and growth, contrasting with the broader VC market's recent falters.
From 2022 to 2023, VC investment in defense tech remained steady, with $35.8 billion across 800 deals in 2022 and $34.9 billion across 627 deals in 2023. In 2024, $9.1 billion has already been invested across 228 deals, underscoring the sector's robustness.
Key Investment Areas
Renewable Energy Generation & Storage: $4.4 billion
Advanced Computing & Software: $3.7 billion
Sensing, Connectivity & Security: $3.7 billion
Space Technology: $3.5 billion
Exit and M&A Activity
While exit activity has been modest, with $2.2 billion across 39 exits in 2023 and $8.3 billion across 35 exits in 2024, merger and acquisition (M&A) activity has seen a notable increase. M&A activity rose from $4.6 billion across 56 deals in 2022 to $9.3 billion across 53 deals in 2023. So far in 2024, $5.2 billion has been recorded across 36 deals, indicating continued acquisitions by larger players to expand their product portfolios.
Defense Innovation Unit (DIU) and Strategic Initiatives
Established in 2015, the Defense Innovation Unit (DIU) integrates commercial technologies into national defense. It has evolved from DIU 1.0 through DIU 3.0, now focusing on scaling capabilities for strategic impact. In April 2023, DIU was realigned to report directly to the Secretary of Defense, enhancing its influence. Fiscal year 2023 achievements include: