Defense tech gets reprieve from Iran war ceasefire
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President Trump pulled back from the brink last night, after having threatened to destroy Iran's "civilization," agreeing to a two-week ceasefire.
- In so doing, he also may have saved the next generation of defense-tech companies.
We don't know what Trump would have done were the temporary truce not struck.
- But, if we take him at even just some of his words, it would have resulted in an enormous amount of human suffering — particularly if desalination plants (or power to those plants) were targeted.
Domestically, this would have been a tough sell.
- Maybe not for most in MAGA, but almost certainly for many in Silicon Valley who until very recently were hesitant to work on or invest in defense technologies.
Venture capital's embrace of these startups — from Anduril on down — has come fast and furious. From just $520 million into U.S. defense-tech startups in 2020 to nearly $7 billion last year, per PitchBook.
- Something that flips that quick can flip back just as quickly if the vibes shift. And killing tens of thousands of civilians could have been that boomerang.
- People don't want to feel complicit in something they believe to be immoral.
Congress also might have become more stingy with the Pentagon, particularly if Democrats take control after the midterms.
- One reason VCs historically avoided defense-tech was that they didn't want to rely on a primary procurer of their product.
- Yes, the Defense Department would have needed to refill their stockpiles, and heightened geopolitical tensions might help incumbents, but new tech spend is often the first thing to go when fists get tighter.
Again, this is all a counterfactual. There is a ceasefire, and most everyone hopes that a lasting peace can be negotiated.
- And, if so, then those building and investing in tools of war will have a lot to gain from there not being more of one.
