Venture Capital rarely creates trends - it follows them, and arguably amplifies them. In the case of rising conflicts around the world, it makes sense for VCs to allocate parts of their funds towards defense. Does that mean they have an interest in prolonging war like this article claims? No - quite the opposite:
War happens when one party thinks that the other party is weak enough to be attacked. This cannot be stressed enough. It's a lesson that has unfortunately been lost on the isolationist movement around the world that believes that cutting funding for the defense of Ukraine or diplomatic efforts towards the Huthis will create less war.
War is avoided if one party is so strong that an attack is futile. You can add other layers of war avoidance on top of that, such as close trade and political relationships, cultural exchange, open communication and ultimately friendship and alliances, but the backbone always has to be strength. The Romans knew this when they said "Si vis pacem, para bellum", and its just as true today.
Creating this strength happens through cultural readiness and technological innovation - and unfortunately, that's where the West has a massive problem. Almost eighty years without an existential threat, paired with ever growing governments and lobbying has created a defense purchasing situation in which ever more enormous contracts are awarded to ever smaller numbers of giant companies.
And the structure of these contracts, such as Cost-Plus that pay for whatever the contractee spends plus a fixed margin on top creates incentives that discourages innovation and efficiency.
We should be grateful that finally startups and VCs are overcoming their reflexive aversion against anything defense and start innovating. The startup ecosystem has been the best engine for innovation we have and finally turning it towards defense might help strengthen the west's place in the world and be a major contributor to lasting peace.
War happens when one party thinks that the other party is weak enough to be attacked. This cannot be stressed enough. It's a lesson that has unfortunately been lost on the isolationist movement around the world that believes that cutting funding for the defense of Ukraine or diplomatic efforts towards the Huthis will create less war.
War is avoided if one party is so strong that an attack is futile. You can add other layers of war avoidance on top of that, such as close trade and political relationships, cultural exchange, open communication and ultimately friendship and alliances, but the backbone always has to be strength. The Romans knew this when they said "Si vis pacem, para bellum", and its just as true today.
Creating this strength happens through cultural readiness and technological innovation - and unfortunately, that's where the West has a massive problem. Almost eighty years without an existential threat, paired with ever growing governments and lobbying has created a defense purchasing situation in which ever more enormous contracts are awarded to ever smaller numbers of giant companies.
And the structure of these contracts, such as Cost-Plus that pay for whatever the contractee spends plus a fixed margin on top creates incentives that discourages innovation and efficiency.
We should be grateful that finally startups and VCs are overcoming their reflexive aversion against anything defense and start innovating. The startup ecosystem has been the best engine for innovation we have and finally turning it towards defense might help strengthen the west's place in the world and be a major contributor to lasting peace.