At a time when all of the big money movers are getting into defense tech, it’s only right for the OG to double down. On Monday, Booz Allen Hamilton, the century-old defense and intelligence consulting giant, announced a $200M boost to its venture arm, raising its total capital commitment to $300M.
Rise of the primes: Booz Ventures launched in 2022 with $100M in funding and a focus on dual-use technologies, particularly cybersecurity and AI. (Other primes, including Lockheed and Raytheon, have also gotten into the defense tech VC space.) We should have known something was cooking when Booz joined 3D-printed drone-maker Firestorm Labs’ $47M Series A last week.
On top of Firestorm, their portfolio features 13 other startups, including:
- Scout AI, which makes software for defense robotics.
- Shift5, which focuses on securing military data to ensure operational resilience.
- Second Front Systems, a software company expediting the delivery of SaaS applications to the Pentagon.
That portfolio is set to more than double, as the company plans to make 20 to 25 new investments in the next few years. With that new cash, Booz Ventures is also looking to diversify its portfolio, especially after catching the post-Reindustrialize manufacturing fever that’s spreading throughout defense tech this week.
“In addition to its current areas of focus—artificial intelligence, cyber, defense tech, and deep tech—Booz Allen Ventures is expanding to invest in companies driving American reindustrialization,” the company said in a statement.
Booz Cruising: While a $300M fund won’t catapult Booz Allen Ventures into the top brass of defense tech VC, they’re betting that their close relationship with the government will be their calling card for startups.
“What [startups] need is help to grow faster or get access to the government,” Booz CFO Matt Calderone told Bloomberg. “We understand the government and we get technology. To them, that’s useful.”
Given that Booz Allen basically runs half of the software development and operations for intel agencies and the Pentagon (generating 98% of its roughly $11B in annual revenue from government contracts), that’s a pretty compelling case.
“Since our first contract with the Navy during WWII in 1940, Booz Allen has stood alongside our military and government partners,” Booz Allen Ventures Managing Partner Brian MacCarthy wrote on LinkedIn. “This venture fund represents the natural evolution of that commitment.”
“This expansion gives us new capacity to collaborate and build with brilliant founders and deliver the best commercial tech to our nation at speed and scale,” MacCarthy added in a statement. Plus, in the DOGE era of contract cuts to consulting firms, it’s not a bad idea to hedge that big-dollar-contract exposure with a bet on the defense tech startups that are more in vogue.