Probably unpopular hot takes on the defense industry overall…

Figured I’d share some interesting points from recent conversations I have had with friends, clients, and partners. Some of these things you might agree with, but I have absolute confidence someone or many will disagree.

1 - GenAI is a sideshow in the DoD, and any significant funding is all in weapon system autonomy projects.

2 - The real VC opportunity in the defense market is in scaling advanced automated hardware manufacturing of weapon systems and associated components.

3 - Most small businesses should not be in the defense market until there is a major additive shift in defense spending due to a new sustained deployment of U.S. forces overseas…unless they are a hardware manufacturer.

4 - Over the next 1-2 years the defense market will shrink as the total number of new contracts reduces, and those remaining new contracts consolidate to larger size companies.

5 - FY25 is going to be a real $h!t show in government, and that will have wide ranging impacts to the DoD as well.

6 - This is all just part of the normal cycle of contraction and reconsolidation that occurs in the military after the end of one major conflict, and before the start of the next….for everything there is a season.

Just my opinions, disagree if you like, but everyone is going to have to place their bets and see what plays out.