Ex-Pentagon Officials Going Straight Into VC

Lily Polanco Follow Jan 02, 2024 · 1 min read
Ex-Pentagon Officials Going Straight Into VC
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A new breed of venture capitalists with close ties to the Pentagon are making big money by investing in startups that sell technology to the military.

As Eric Lipton reports in The New York Times, there has been an explosion of investment flowing into defense technology startups from venture capital and private equity firms. Many of these investors are former Pentagon and national security officials who are using their connections in Washington to help their portfolio companies secure lucrative government contracts.

The Times identified over 50 such officials who have made the leap in recent years from government to venture capital firms focused on the defense sector. Unlike retired generals in the past who took high-paying jobs with established giants like Lockheed Martin, this new generation is being enticed by the potentially massive profits if the startups they invest in hit it big with breakthrough technologies.

Firms like Red Cell Partners and Snowpoint Ventures are pumping billions into young companies developing drones, artificial intelligence systems, hypersonic missiles and other cutting-edge weapons. And they aren’t shy about lobbying their former colleagues to steer more government spending toward these types of startups.

The venture capitalists argue they want to shake up the old military-industrial complex and accelerate adoption of innovations needed for national security. But critics like Senator Elizabeth Warren warn the cozy ties risk war profiteering and advancing private interests over public ones.

So far there have been few runaway success stories, so the investors have an incentive to tap their insider connections in Congress and the Pentagon to help. They push for bigger slices of the defense budget pie, policy changes to advantage startups bidding for contracts, and for officials to take meetings with companies they are backing.

The efforts can pay off, as some startups have started to land awards worth hundreds of millions after lobbying from their well-wired backers. But lawmakers differ on whether facilitating the new generation spinning through the revolving door is a boost for innovation or a symptom of Eisenhower’s “military-industrial complex” run amok.

Written by Lily Polanco Follow
Junior News Writer @ new.blicio.us.