Key Takeaways: The war in Iran is likely to accelerate innovation for defense technology companies. Innovation is particularly needed to develop low-cost missile interception technology. While established defense technology companies have a head start, a strong patent portfolio may allow up-and-coming startups to compete.
The war in Iran is increasing the attention and innovation for defense technology startups, Pitchbook reports. According to the story, the war will test the capabilities of existing companies and raise the bar for new startups in the defense technology sector.
The war in Iran presents an opportunity for innovation to provide low-cost alternatives to current missile interceptor options. According to the story, current interceptors are on the order of 100x more expensive than the drones and missiles they are fighting against. This cost differential can become an issue during sustained engagements. In the story, Jordan Blashek, General Partner at Overmatch VC discussed the risk of the cost differential:
“It’s so expensive—during sustained engagements, enemies can begin to really bleed us dry.”
Some lower cost solutions are already being explored. According to the story, these potential solutions include a high-power microwave (HPM) system developed by Epirus, and autonomous drone swarm technology, for example, a voice-controlled swarm technology developed by SpaceX. Further, according to the story, more established defense technology companies, may have advantages in innovating because these more established companies already supply multiple elements needed for missile interceptors. For example, Anduril, a defense technology company with a $60 billion valuation, currently has products that “span the warfighting ecosystem,” according to the story. Further, the story states that more established defense technology companies have a leg up because of integration into the Pentagon.
The war presents challenges and opportunities for up-and-coming startups in the defense technology sector. While established defense technology companies have an advantage due to existing integration with defense programs and developed platforms, up-and-coming startups may be able to thrive due to the need for innovative missile interception technology. Specifically, the development of low-cost and quick-to-manufacture missile interception technology, which can keep up with the cheap drones and missiles being deployed by Iran. A strong patent portfolio may be key to the success of up-and-coming defense technology startups. A strong patent portfolio can provide a smaller startup with leverage, licensing, and partnership opportunities, which may help level the playing field compared to established defense technology companies.
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