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The government shutdown is slowing down the defense and space tech boom.

The big picture: Silicon Valley investors have poured billions into the sector, in no small part thanks to the Golden Dome project.

But the government shutdown is forcing the typically fast-moving industry to reduce speed — and adding a dose of confusion to the mix.

Case in point: Andrew Rush, the CEO of space power grid company Star Catcher, assumes he won't be paid on some existing government contracts until the shutdown ends, and new contracts are delayed by government staff furloughs.

Threat level: Star Catcher currently sees the shutdown as a frustration rather than an existential risk. 

But if the shutdown is protracted, it could eventually put some startup balance sheets at risk.

Axios spoke with Rush and his COO, Bryan Lyandvert, on what they're seeing. Backed by B Capital and Initialized, the company has both commercial and government contracts, including one with the Air Force.

This interview has been edited for length and clarity.

Axios: We're over a month into the shutdown. What are you seeing?

Lyandvert: "It has impacted our ability to talk to folks about future projects. Many of the folks that we're in touch with are currently furloughed or unable to respond in a timely fashion.

We've seen a number of agencies shift their focus to more immediate opportunities... they're more focused on executing existing missions and contracts."

Could that have a downwind impact on revenue projections and liquidity?

Rush: "We're beginning to see folks across the space sector say, 'Hey, orders that we anticipated receiving in Q4 are slipping into 2026 because of the shutdown. That does have an impact on the timing of revenue and hitting of milestones, which can have an impact on runway. Winning a big contract can be a catalyst for raising the next round of funding. 

I think we're going to see that echo through the next couple of quarters because once the government reopens, folks will have to play catch-up, which means more delays.

That said, [the government and investors] recognize how important defense tech and space tech specifically is for national security, for global security. So right now, it's a timing issue, not a structural issue.

When you get paid also matters in a hardware-heavy sector like this.  Correct me if I'm wrong, but some contracts don't pay until the product is delivered, while others are paid upfront?

Rush: "I think folks that are on cost-plus contracts, especially, are in the same boat as furloughed employees. They're not getting that paycheck, but they still have the bills. It varies, but it's typically an invoice every month."

It seems like a mixed bag. Some contracts are still getting paid, but others aren't.

Rush: "I can speak to our own experience. We have a few fixed-price contracts that pay based on monthly milestones. We're assuming we aren't going to get paid until the government reopens. The personnel to approve them may or may not be furloughed. The personnel to process the invoices may or may not be furloughed.

We have to build into our model the capital to weather these kinds of events. Those contracts are not the majority for us, [so] we can weather that, but I can't speak for other people in that kind of situation. 

The space sector really has two main pillars of customers. There's the government customer, which includes NASA, NOAA — then there's commercial customers. It's really important to build a business that is useful to both."

Star Catcher CEO sees government shutdown slowing defense boom

Silicon Valley investors have poured billions into the sector, in no small part thanks to the Golden Dome project.

Space scene showing Earth in the lower left, a bright sun at center, and a large spacecraft using solar sails illuminated by the sun, with beams of light extending into space.

Star Catcher beams concentrated solar rays to satellites' solar panels. Image: Courtesy of Star Catcher

The government shutdown is slowing down the <a class="gtmContentClick" data-vars-link-text="defense" data-vars-click-url="https://www.axios.com/2025/07/01/defense-tech-venture-capital-anduril-nato" data-vars-content-id="7472ccfa-65cb-45f5-8be9-dae18f2ca47f" data-vars-headline="Star Catcher CEO sees government shutdown slowing defense boom" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2025/07/01/defense-tech-venture-capital-anduril-nato" target="_self">defense</a> and space tech boom.The big picture: Silicon Valley investors <a class="gtmContentClick" data-vars-link-text="have poured billions" data-vars-click-url="https://www.axios.com/pro/all-deals/2025/11/06/golden-dome-neoprime-anduril-palantir" data-vars-content-id="7472ccfa-65cb-45f5-8be9-dae18f2ca47f" data-vars-headline="Star Catcher CEO sees government shutdown slowing defense boom" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/pro/all-deals/2025/11/06/golden-dome-neoprime-anduril-palantir" target="_self">have poured billions</a> into the sector, in no small part thanks to the Golden Dome project.

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Star Catcher CEO sees government shutdown slowing defense boom

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