Axios AI+DC Summit: Commercial tech's role in the defense sector is growing, leaders say

WASHINGTON, D.C. — Leaders in the national security space are increasingly relying on technology from private industries in a major shift, according to startup, security and policy experts at a March 25 Axios AI+DC Summit event.

Why it matters: Drone, manufacturing and software companies that straddle public and private sectors have the ability to build innovative products in a timely manner that cost less than many of those that solely rely on government contracts.

Axios' Colin Demarest and Dave Lawler moderated the expert voices roundtable discussion, which was sponsored by Accenture Federal Services.

What they're saying: Startups pairing private-sector revenue with defense work can keep up with investor timelines without the same burden of government contract red tape.

• "These contracts can take 18 to 24 months to go through legal review," Construct Capital co-founder and managing partner Rachel Holt said. New organizations typically only have 18 to 24 months between funding rounds to demonstrate progress to investors.
• "Dual-use companies will ultimately end up crossing the finish line before many other companies," added Skydio global head of national security strategy Mark Valentine. "Because what is really valuable is the speed of innovation, being able to iterate."

Case in point: The dual-use nature of Divergent's factories facilitates their operation at such a high capacity, "and model[s] a cyclical defense flow while still sustaining a low cost," Divergent CEO Lukas Czinger said.

• "The taxpayer defense industry benefit is they're getting that low cost because we also have the commercial offtake," he added.

Yes, but: Limited supply-chain visibility remains an obstacle.

• "There's no ability to accurately understand demand aggregation down to materials and minerals," Exiger president Carrie Wibben Kaupp said.
• "We don't have manufacturing capacity in the United States right now. That is a critical requirement for so many different technologies," said Paul Lekas, Software & Information Industry Association EVP of global public policy and government affairs.

The bottom line: The U.S. isn't only competing on better defense tech and national security strategy — but on whether it can scale, supply and sustain it.

Content from the sponsor's remarks:

"What our war fighters in defense or civilian agencies need is not just commercial technology now," said Garrett Berntsen, Accenture Federal Services CAIO and managing director of AI and data practice. "It is a full end-to-end transformation to sort of totally reinvent how they're doing their jobs."