Defense-tech bubble heads for consolidation as funding outpaces revenue

The Defense-Tech Bubble Is Headed for Consolidation

Venture capital poured nearly $50 billion into defense-tech startups last year, yet federal obligations to VC- and PE-backed national-security companies totaled just $4.3 billion in FY25. The author argues the contestable market for new entrants is a single-digit-billion today, and predicts a reckoning within 18 months, leading to mergers, recapitalizations, and acquisitions by primes and mega-startups.