Patrick Malcor’s Post

Is Defense Technology in a bubble? This is such a strong analysis by AIN Ventures it's a disservice to try summarizing it. Worth checking out the details. "Our excitement is rooted in the fact that ... it is encouraging to see storied funds that are enthusiastic about... Defense Tech. An openly competitive geopolitical environment necessitates a strong Defense Tech sector..." However, "Defense Tech valuation headwinds include customer concentration (only selling to the DoD), long sales cycles, contracting mechanisms that limit upside, low margins of hardware companies, high CapEx necessary to get to commercialization, and regulatory restrictions that potentially limit sales to foreign entities." #defensetech #defenseinnovation #defenseindustry #dualuse https://lnkd.in/eB7-d4CT 

To celebrate the 4th of July, enjoy this exceptional call for "The American Millennium" by Packy McCormick. "To the extent that it is an empire, America is an empire defined not by its ability to expand geographically to capture existing resources, but by its ability to expand technologically to create new ones. America, therefore, is a boundless empire."   #freedomsforge #defenseindustry https://lnkd.in/epPFWf5Z

I only found this by following a post by Liza Tobin about the Reindustrialize summit last week in Detroit. Wow, this report by Special Competitive Studies Project - SCSP is a clear & compelling playbook for revitalizing American industry, a "National Action Plan for United States Leadership in Advanced Manufacturing." Must read and DO. From its First Principles: "The Future Is Cyber-Physical" and "Relink Innovation and Production Locally" to countless concrete recommendations for action, so many that it's only possible to highlight a few, such as: "Creating an AI-enabled digital twin [an "ARPANet"] of the entire U.S. industrial base..." "Scale and Reimagine the Manufacturing USA Program.." and increase the program's combined funding from $127 million to $500 million. Double funding for Manufacturing Extension Partnership (MEP) in each state to "accelerate the deployment of ADVM technologies and digital manufacturing systems" (like the excellent Kentucky Manufacturing Extension Partnership that we work with at Whelan Machine & Tool ). Consolidated capital access programs (!!) like "Innovative Technologies in Manufacturing (ITM) ... State Manufacturing Leadership...and the Small Business Administration's (SBA) 7(a) Loan program" and use "investment tax credit (ITC) options to assist manufacturers seeking to digitalize their operations." "Build Trade Alliances with Allies and Partners... that foster demand for U.S. advanced manufacturing products among allies and partners while lowering the cost of critical inputs." I think if you're not energized by this you're simply not paying attention. There is no reason we should not immediately implement every single one of the recommendations in this stunning, well researched report. #defenseindustry #manufacturing #freedomsforge Ajax Defense https://lnkd.in/ewA5b_cm

It's not just how much we spend on defense (which could reach an all time high in absolute dollar terms of $880 billion for FY2025), it's about HOW we spend it. "The existing Pentagon Planning, Programming, Budgeting, and Execution (PPBE) process governing defense spending dates back to the 1960s. Despite occasional fixes and changes, it's no longer up to the challenge of meeting today's rapid technological changes, or the complex challenges posed by China's and Russia's militaries, from drones and hypersonics to naval forces and space." Arthur Herman (who wrote Freedoms Forge!) highlights 4 key recommendations taken from the report by the PPBE Reform Commission in February 2022. The overarching theme is the need for urgency in actually implementing the commissions recommendations. "How important are these changes in today's defense environment? At a time when China can obtain new weapons systems five to six times faster than the Pentagon; and complete the development to fielding cycle 2.5 times faster; getting a planning, programming, and budgeting system that can keep up with technological as well as strategic changes, isn't just a good idea. It's imperative." #defenseindustry #defenseinnovation #defensetech https://lnkd.in/eSu5PWF7

Sweden brings industrial might to NATO. The 32nd member nation's history of self-sufficiency resulted in deep investments in industrial capacity, and from 2020-2024 its defense budget has doubled. "Sweden not only operates a fleet of submarines but it also designs and builds them — as it does its frigates. It produces the Gripen jet fighter. It develops and manufactures military-grade vehicles, early airborne warning radars, artillery systems and a host of small arms and munitions. It manufactures satellites and will soon host the only launch pad capable of sending rockets to orbit in Europe." Hopefully NATO membership will deepen Sweden's industrial ties to other partner nations as military cooperation continues. #defenseindustry https://lnkd.in/eyuHKgst

The McKinsey & Company podcast makes the "Case for Space", estimating the global space economy could reach $1.35 trillion by 2035. Think about the opportunities in two halves: "One-half is what we call 'the backbone': launch vehicles, rockets, and satellites and all the ground equipment that makes those things work. The other half is what we call 'the reach': the applications that use that backbone to provide goods and services to people on Earth." In addition to applications for communications and mobility, a fast advancing area is data derived from space-based applications. "It used to be that a company or a government would take a picture of Earth once a day or once a week, but now it's able to take that picture very often... So you're able to use not only visual data but also other types of data on what we call a high return aspect to see what changes. Think about crops, for example, and understanding how much water there is to feed those crops, what you may need to do about that, and what actions you may want to take." #defensetech #defenseindustry #space https://lnkd.in/ejVjSZmX 

Interesting statistics for sure, but this one stood out: "American manufacturing growth outpaced the rest of the world’s at the end of 2022. Additionally, in 2022, for the first time since the late 1970s, U.S. employment in manufacturing surpassed the peak set during the previous business cycle. Roughly 200,000 to 250,000 new manufacturing jobs are expected to be added in the U.S. over the next couple of years, with millions more likely to be added over the next decade."

William LaPlante and Heidi Shyu outline the Defense Department's efforts to drive innovation and to quickly field emerging and critical technologies, claiming that "there has never been a better time to find entry to and do business with the department." "We have invested in new research and production activities like the Accelerate the Procurement and Fielding of Innovative Technologies program, and new mechanisms for partnerships through our Manufacturing Innovation Institutes." "We have made use of programs like Industrial Base Analysis and Sustainment, Manufacturing Technology and Defense Production Act Title III to shore up the defense industrial base so it can deliver needed systems." "We have also strengthened our engagements with the commercial sector through the work of the Defense Advanced Research Projects Agency and the Defense Innovation Unit, in addition to initiatives like the Office of Strategic Capital and our network of APEX accelerators." #defenseinnovation #defensetech #defenseindustry https://lnkd.in/ei9YcKuF  

The Merge podcast interviews reps from both Anduril Industries and General Atomics to talk about the Collaborative Combat Aircraft (CCA) program. The Air Force plans to purchase over 100 of the AI powered 'loyal wingmen' by 2029 and has a long term goal of fielding 1,000+ with cost-effective scalability. #defensetech #defenseinnovation #defenseindustry https://lnkd.in/eHvefQ9y

Fully agree with my colleague Dr. Markus Federle, cofounder at Tholus Capital, “Superior military technology is the most credible deterrent to war. For this deterrence to be efficient, dual-use technologies as well as defensive and offensive capabilities are required." Apart from any kind of moral question about ESG or not, dual-use technologies are simply a built-in feature of VC backed investments. Otherwise it's difficult for startups to achieve scale required to deliver VC returns. So dual-use plays a clear role in co-opting technologies into defense that can achieve scale in a market larger than just defense, and therefore drive down costs for defense-specific applications and accelerate innovation. At the same time, this is not a trade-off decision. We need dual-use for its part, and we will still need a certain number of advanced platforms and technology that only the military can use. I'm supporting Tholus Capital because of our commitment to deploy capital across the entire spectrum. #defensetech #defenseinnovation Ajax Defense