Nikkei "Investment in defense industry startups is the highest in 10 years... The speed of the modern war is limited by large corporations"

Nikkei reports... The speed of modern warfare is limited by large corporations.

(Tokyo = Yonhap News) Correspondent Doyeon Lee = Investment in startups in the defense industry is accelerating around the world, and startups with new technologies such as drones and artificial intelligence (AI) are trying to change the face of security, the Nippon Keizai Shimbun (Nikkei) reported on the 5th.

According to market research firm Pitchbook, the amount of venture capital (VC) investment in startups in the defense industry in the first half of this year (January to June) was $40.8 billion (approximately 54.9 trillion won), a 56% increase compared to the same period last year.

This is the highest in the past 10 years on a semi-annual basis, and is expected to hit an all-time high on an annual basis this year as well.

The most notable company is Anduril Industries of the United States, which announced that it had raised approximately 780 billion yen (approximately 6.6 trillion won) in an investment round last May.

Andreessen Horowitz, a large American VC, is focusing on investments in the security field, including recruiting a former high-ranking U.S. military general as a special advisor, and is also investing in Anduril.

Nikkei pointed out that the background to this increase in investment in startups in the defense industry is the war in Ukraine that began in 2022, the confrontation between the United States and China, and the military conflict between the United States and Iran.

Among these, AI-equipped data analysis software developed by Palantir of the U.S. was used in the U.S. military's attack on Iran.

In the Ukraine war, new technologies are being used, including the presence of drones.

The existing defense industry has been led by large corporations such as Lockheed Martin of the United States and Mitsubishi Heavy Industries of Japan, but large corporations have limitations in that technology development often takes a long time.

However, building a security system to respond to new wars has become an urgent task for each country, so efforts have been focused on nurturing startups that can develop quickly.

In Japan, funds are also pouring into startups in the defense industry.

Sakana AI, an AI development company, raised about 31 billion yen (about 264.4 billion won) in funding from investors in Japan in the first half of this year, and signed a demonstration contract with the Japanese Ministry of Defense in July to use AI for information analysis.