Barriers to Advancing Defense Industry Initiatives

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

SMEs are the UK defence sector’s greatest untapped asset, but too many still face avoidable barriers when trying to break into the market. Based on recent research and industry feedback, the top three challenges haven’t changed, but their impact is growing: 1️⃣ Fragmented and complex routes into Defence. SMEs still face a maze of frameworks, portals and processes. Public procurement documentation often exceeds what’s legally required, frameworks close for years at a time, and there’s still no single, clear entry point for new suppliers. This complexity disproportionately affects smaller firms with limited time and resources. 2️⃣ Limited transparency when engaging with Primes. Despite good intentions, Primes remain the primary gatekeepers. Their supplier portals often provide little visibility on where submissions go or how they’re assessed, with minimal feedback. Primes’ SME spend reporting also varies widely, making it difficult to judge where opportunities actually are and how to build long‑term relationships. 3️⃣ Heavy commercial, legal and accreditation hurdles. Once a capability match is identified, SMEs hit time‑consuming obstacles: unique NDAs for every organisation, lengthy onboarding, DEFCON-heavy contractual terms, and accreditation requirements that can take months. These create cash‑flow strain and delay time-to-value for both sides. So what can be done? Practical solutions that would move the needle: 🔧 Simplify and standardise procurement routes. Establish a way in which SMEs can identify their capabilities for public sector tenders, perhaps via the new DOSBG, signposting to bidders in the pre-market engagement phase. Keep frameworks genuinely open and reduce over‑engineering of documentation to what is legally necessary. Provide clear signposting of where emerging tech aligns with Defence priorities. 🤝 Improve Prime–SME engagement transparency. Introduce a consistent standard for SME submissions, response timelines, and triage processes across all major Primes. Mandate annual, independently verified SME spend reporting to build trust and visibility. Encourage early‑stage technical dialogue (see point one above) so SMEs can protect IP and understand real need before investing heavily. 📄 Standardise commercial onboarding. Create a Defence-wide standard NDA, similar to common templates used in the legal sector. Introduce a “fast-track onboarding” model with Primes for SMEs meeting baseline criteria. Expand modular accreditation: allow SMEs to reuse certifications across Primes and MoD platforms without revalidation (yes JOSCAR is supposed to do this - but in reality?). Defence needs the innovation, agility and pace that SMEs bring. Reducing these barriers isn’t about lowering standards, it’s about removing friction that holds the entire ecosystem back. If the UK wants a more resilient, sovereign and innovative defence industrial base, this is where the real progress starts. We will continue to push this agenda.

Defense contracts get signed. Budgets get approved. Factories get built. And yet, production timelines still slip by 3–5 years. The bottleneck isn’t where most people think. It’s not design approval. It’s not funding delays. It’s not even technology transfer. The real constraint is certification velocity. – Tier-2 suppliers need 18–24 months for defense-grade QA certification – Each platform depends on 200–400 certified component suppliers – Certification bodies process ~30–40 suppliers per year Do the math: 300 suppliers ÷ 35/year = ~8.5 years before true serial production. And that’s before workforce constraints even show up: – Welding, composites, avionics certification: 12–18 months – Annual attrition in defense manufacturing: 15–20% – Training pipelines can’t replace certified labor fast enough Then comes the tooling-to-throughput mismatch: – Tooling designed for 8 units/year – Contracts demand 24 units/year – Mid-program retooling adds 14–18 months This is where timelines actually slip. Not in boardrooms. In the certification queue. Industrial scale isn’t constrained by intent. It’s constrained by how fast a system can certify, absorb, and repeat. #DefenseManufacturing #SupplyChain #QualityAssurance #IndustrialPolicy #Aerospace

Breaking Down the Wall Between DoD and Industry Technology Leaders Our DoD CTOs, CDOs, and CIOs are some of the smartest people in government. But we’ve built a legal and bureaucratic fortress around them that cuts them off from the very knowledge they need to modernize our defense capabilities. The absurd reality: A DoD CTO can’t grab coffee with a Google VP of Engineering to discuss cloud architecture patterns. A Chief Data Officer can’t attend an AWS summit without months of approvals. A military CIO can’t participate in a Microsoft roundtable on AI governance without navigating a maze of ethics reviews. Meanwhile, our adversaries are rapidly adopting commercial best practices while we’re stuck reinventing wheels behind closed doors. What we’re missing: • Real-time insights on emerging technology trends and implementation strategies • Battle-tested approaches to scaling AI/ML in enterprise environments• Lessons learned from massive digital transformations • Direct access to technical leaders who’ve solved the exact problems we’re facing • Informal knowledge sharing that happens in hallway conversations and industry events The current system treats every interaction like a potential breach instead of recognizing that isolation IS the security risk. When our technology leaders are cut off from industry evolution, we fall further behind every day. We need streamlined pathways for our DoD technology executives to: ✓ Participate in industry forums and technical conferences ✓ Engage in peer-to-peer learning with private sector counterparts ✓ Access technical advisory relationships with proven industry leaders ✓ Collaborate on non-sensitive technology strategy and implementation approaches This isn’t about sharing classified information, it’s about ensuring our leaders have access to the same knowledge base that drives innovation everywhere else. The question: How do we create secure, compliant frameworks that enable our DoD technology leaders to learn from and collaborate with industry experts without compromising security or ethics requirements? Because right now, we’re treating access to industry best practices like it’s a threat to national security or favoritism, when the real threat is falling behind because we’re isolated from the innovation happening around us. What solutions have you seen work? How do we balance necessary security with essential knowledge sharing?

The DoD faces challenges in maintaining a competitive DIB, as highlighted by DepSec Kathleen Hicks and former President Trump. The consolidation of prime contractors from 51 to fewer than 10 and the isolation of the defense sector from the broader commercial economy have concentrated power among a few large defense companies, stifling competition and innovation. Unfunded mandates like the Cybersecurity Maturity Model Certification (CMMC) contribute to this issue, imposing significant burdens on small and medium-sized businesses (SMBs) and excluding them from the defense market. The costs of compliance and the complexity of government contracting create barriers many SMBs cannot overcome. To address this, the DoD should fund and provide zero-trust, quantum-resistant platforms to reduce these barriers and encourage broader participation from SMBs. By taking on the financial and technological burden of these cybersecurity measures, the DoD can create a more inclusive environment, diversify the defense industrial base, and inject innovation into the sector. This approach would align with DoD efforts to foster innovation in AI, 5G, and quantum technologies, enabling the defense industry to better address modern warfare challenges and maintain U.S. technological superiority.

As the UK prepares to see the latest SDR, I’ve written in the Financial Times (link below), arguing that the key question to define success is this: can we actually use what we buy? The MOD faces a deeper challenge than procurement inefficiencies or budget constraints: a cultural resistance to adoption. Adoption is when new technologies go from “trial” to “tool” — becoming part of doctrine, training, and permanent budget lines. Until that moment, the military can’t use them. And the companies building them? They don’t get paid. To unlock private capital investment into defence, investors need to see a customer that actually adopts and rewards innovation. The UK has spent tens of millions on FPV drones — but all were sent to Ukraine. Our own troops train without them. Meanwhile, Ukraine updates tactics weekly, adapting faster than the MOD finds its pen. The MOD knows what kit it needs. But internal structures actively block progress — leaving our forces dangerously behind modern warfare trends. We need more than reform on spreadsheets. We need a cultural shift. The SDR, the new Defence & Security Partnership with the EU, and discussions of a global defence bank are promising steps. But unless the UK fixes its adoption bottleneck, these reforms won’t deliver real change. Innovation doesn’t just need funding. It needs will. Read the full piece in the Financial Times: https://lnkd.in/e-mwp32H #UKDefence #SDR2025 #DefenceTech #FPVDrones #MOD #DefenceReform #TechnologyAdoption #FutureForce

Britain’s largest defence primes are pausing investment and hiring decisions as they wait for clarity on the Defence Investment Plan. Senior leaders from BAE Systems, Babcock, QinetiQ and Leonardo told the Scottish Affairs Committee that capital is effectively “on hold”, despite expectations of increased defence spending. Babcock’s John Howie described three converging inflection points shaping the sector: a deteriorating geopolitical environment, the rapid validation of low-cost autonomous systems in Ukraine, and the financial realignment required to respond. While primes are already shifting R&D and internal strategy towards AI, autonomy and uncrewed platforms, execution is constrained by uncertainty over government priorities, procurement models and programme scale. The result is a structural lag between policy intent and industrial mobilisation. Even with funding anticipated, the absence of directional clarity is slowing workforce expansion, supply chain commitments and platform development decisions across the UK’s defence industrial base. This highlights a persistent challenge in defence economics: capital availability alone does not drive capability generation, alignment on demand signals and procurement pathways is equally critical to unlock industrial tempo. #defence #nationalsecurity #aerospace #ai #ukindustry

Duke Hartman, P.E., CEO of Integer Technologies, is focused on a different problem entirely: why so much advanced technology never makes it into the field. Most defense companies assume innovation is the bottleneck. They’re wrong. In this week’s episode of Mission Critical: Defense Recruiting, we dig into the defense innovation gap—and what actually determines whether a solution gets deployed or dies in evaluation. Billions are poured into cutting-edge systems every year. A large percentage never leave the lab. Not because they don’t work. Because they don’t fit. Programs don’t adopt technology based on performance alone. They adopt what integrates cleanly, aligns with incentives, and reduces risk. That’s the game. Inside this episode: • Why strong technologies stall before deployment • How procurement and incentives shape real outcomes • Why integration is the gating factor for adoption • The risks programs avoid when evaluating new solutions • Where most startups misread the defense environment “If it doesn’t fit into how the mission already works, it doesn’t matter how good the tech is.” — Duke Hartman If you’re building or scaling in defense, this is a useful reset on where the real constraint sits. 🎧 Full episode in comments #MissionCritical #CEOinsights #AerospaceandDefense #GovCon #Innovation #NationalSecurity

Western governments are entering the largest defense rearmament cycle since the Cold War. NATO is moving toward 5% of GDP on defense. The U.S. defense budget is approaching $1.5 trillion. Europe is rebuilding industrial capacity. Since October 7, Israel has effectively doubled its defense spending and production capacity. Demand is no longer the question. Financing is. Defense is not a traditional asset class. Program timelines span years, sometimes decades. Revenue is concentrated in a single buyer. A company can secure a major contract and still face a liquidity crisis before production begins. The gap between innovation and scaled delivery is now the central constraint. Capital is one reason. Experience is another. Most founders entering defense have never navigated a procurement cycle, a program of record, export controls, or the operational realities of military deployment at scale. The financial gap and the knowledge gap compound each other. Venture capital plays an essential role in early innovation. It tolerates losses and backs unproven technology. But venture was never designed to finance factories, inventory, working capital, or long-cycle production infrastructure. That requires a different layer of capital. Private credit, structured finance, and institutional lending are beginning to enter the sector. A new financial architecture is slowly emerging around defense production and strategic industry. It is overdue. Ukraine exposed the fragility of Western stockpiles. The Middle East is reinforcing the lesson. The challenge is no longer technological superiority alone. It is the ability to manufacture, sustain, replenish, and finance at scale. Israel offers a concentrated example of this shift. The country’s defense sector combines rapid battlefield-driven innovation with growing industrial demand, accelerating the development of new financing structures, institutional partnerships, and allied production capacity. Wars are no longer constrained primarily by weapons design. Increasingly, they are constrained by industrial throughput and liquidity. The money exists. The demand exists. The geopolitical necessity is clear. The missing piece is the financial architecture connecting all three. We wrote more about this in the latest issue of The Corridor, including the financial architecture emerging around defense production and industrial scale-up. Link in comments.

DEFENSE 🇺🇸 …..Defense tech’s new constraint isn’t funding. It’s the factory. —- 📄 For years, the bottleneck in defense innovation was assumed to be capital or breakthrough technology. That assumption is now outdated. 🏭 The real constraint has shifted to manufacturing capacity. 🧮 What’s killing venture-backed defense startups today isn’t early fundraising—it’s what I think of as the Valley of Production: throughput, skilled labor, compliance, permitting, supply-chain resilience, and the ability to deliver systems at scale on compressed timelines. 💰 Investors have noticed. Capital is moving upstream—decisively—into physical production infrastructure. ~ Manufacturing-focused defense investment jumped from roughly $500M annually in 2022–2023 to $2.6B in 2024, then surged again to $4.7B in 2025. That’s not a cycle. That’s a structural repricing of execution risk. ~ Factories, tooling, test infrastructure, and supplier control are no longer “operational details.” They’re core drivers of valuation. ~ Capital is clustering where scaling is hardest: drones, space systems, defense electronics, propulsion, energetics, and maritime autonomy—areas constrained less by software iteration and more by compliant inputs, facilities, and scarce test environments. 🏦 You can see the shift in behavior. Time between funding rounds has compressed dramatically as companies pull capital forward to stand up production earlier and reduce downstream ramp risk. On the customer side, the signal is just as clear. As the Department of Defense pushes toward attritable mass and delivery credibility, manufacturing readiness is starting to matter as much as—if not more than—technology readiness. Look at the recent investments by the DOW. —- Looking to 2026, takeaways IMO Execution beats invention. Factories beat pitch decks. Repeatable output beats elegant prototypes. So winners won’t be the companies with just the best ideas. They’ll be the ones that can actually build. 🚀 #DefenseTech #Manufacturing #IndustrialScale #NationalSecurity #AerospaceAndDefense #HardTech #SupplyChain #VentureCapital