Hi, I’m Katie Malone, and this is Innovation Wire by Technical.ly. We send this newsletter every two weeks, covering local trends in AI, tech, startups, entrepreneurship and jobs of the future.
If this was forwarded to you, subscribe here.
Today we’re talking about the defense tech boom — and potential cost.
For startups and manufacturers, more federal defense money can look like a huge opportunity.
A Pentagon contract can turn a prototype into a commercial product. When funding is tight, that’s hard to pass up. But reputational risk could present a similarly hard call.
Your answer might depend on where you’re based. California and Texas land the biggest aerospace and defense VC deals, per PitchBook data, but those aren’t the only places where defense tech is taking off. To predict where military spending might grow next, which communities should be paying the most attention, I scored every state using federal contract data based on recent growth, long-term growth and the size of current contracts.
Shipbuilding helps explain Connecticut’s high ranking, especially given its role in submarine production. Virginia, a longtime national security hub, also ranked high, highlighting the power of being physically close to Washington.
Other states ranked well because of specialized niches. New Hampshire’s strength is in ammunition and advanced weapons, while Arizona’s is in missiles and systems that stop drones.
Pennsylvania is getting a lift from ship and port work, even more important in light of the delays in the Strait of Hormuz instigated by US military action.
Indiana and Louisiana are worth watching, too. Indiana’s numbers show its manufacturing and high-speed weapons concentration. Louisiana’s story is tied to shipbuilding, industrial land and ports — the kind of basic systems and facilities the US military is paying closer attention to.
There’s important context to consider beyond the contracts, like how Vermont may be seeing a surge on paper, but politically, it is not likely to go all in.
That’s a choice every business — and individual — has to make. We’ve seen companies on both sides of it do just fine.
Affectiva shows one path companies can take. The Boston AI startup said no to money linked to the CIA because its founders did not want the technology used for spying. It later built out commercial markets in automotive and advertising before being acquired by Smart Eye for $73.5 million.
Ghost Robotics illustrates another path. The Philadelphia robot dog–maker faced months of protests over military uses of its technology, but the backlash did not change the company’s work. A South Korean contractor closed a $240 million deal for majority ownership in Ghost not long after protesters graffitied “murderer” on the CEO’s front door.
As wars rely more on software, a lot more ventures become defense companies even if they didn’t look like one at first.
Public anger can damage a brand, but not necessarily as much as losing out on big money — the kind of money that can have a notable effect on a region’s economy. The question becomes, what are communities willing to accept in exchange?
Another angle:
“Not long ago, it was considered taboo in Silicon Valley to work in defense, let alone proudly wear that company's logo on a T-shirt. Today, the opposite is true. We're at a moment where some of the brightest minds are choosing to put their talent toward national security, and they're proud to stand behind it.”
Do a company’s contracts with the Department of War affect whether you’d support it? Have you faced this dilemma in your own work? Hit reply and let me know.
Technical.ly headlines of the week
3 things to know
🎶Terminal earworm: Honolulu airport’s hourly soundtrack now includes AI-made songs about island life, aviation and airport workers. Some travelers hear local color, but others say it’s a missed chance to spotlight local musicians. [Honolulu Civil Beat]
🍇Sour grapes: An Oregon inheritance fight over a family winery has turned into a warning shot for lawyers using AI. Two brothers accused their sister’s attorneys of filing unverified AI-generated claims — and the judge responded with $100,000 in sanctions. [KGW8]
🐴Derby Day: Horse race betting may be timeless, but this year’s Kentucky Derby came with a tech twist. The Louisville Thoroughbred Society launched AI Derby, a platform that used historical race data and predictive modeling to forecast winners. [WAVE News]