Modernizing Military Power | Global Conference 2026

Investment Surge in Defense Tech:

• Venture capital in defense tech grew from $150 million (49 companies) in 2016 to $49 billion in 2025, with projections to reach $100 billion in 2026.
• Capital allocation is shifting from software/SaaS toward "atoms" (hardware, robotics, shipbuilding, manufacturing) and software-enabled infrastructure.
• Panelists predict a "barbell" market outcome where 8–10 new "neo-prime" companies will capture the majority of the $200B+ opportunity, while the long tail of smaller firms faces consolidation or failure.

Strategic Shifts in Procurement and Culture:

• The Trump administration's $1.5 trillion budget blueprint signals a 50% increase across the board, driving urgency and a shift from "cost-plus" to commercial accountability (penalties for schedule delays).
• Cultural mandates are forcing the Pentagon to prioritize commercial solutions and "dual-use" technology over legacy in-house development; top 10 cost-plus contracts are being renegotiated.
• Risk calculus is changing at the DoD, making it riskier for contracting officers to default to legacy primes (Lockheed, Boeing) compared to agile startups like Saronic, Hadrian, or Valner.
• Global replication of US innovation models is occurring, with allies (Canada, Israel, Ukraine, France, Germany) establishing similar innovation units and sovereign capital ecosystems.

AI and Cybersecurity Disruption:

• AI has accelerated vulnerability exploitation from months to "machine speed," enabling threat actors to ingest binaries (via models like Mythos) to create exploit kits and chain zero-days without source code.
• Traditional cyber security suites are under pressure to pivot to AI-native, autonomous solutions (e.g., autonomous pen-testing, self-healing networks) to keep pace with threat velocity.
• Panelists anticipate significant consolidation in the cyber industry over the next 1–2 years as incumbents acquire AI-native capabilities to survive the disruption.
• Quantum computing maturity is advancing faster than anticipated (12–24 month horizon), creating immediate risks for encryption (quantum resiliency) and GPS/PNT, while also offering new sensing capabilities.

Reindustrialization and Workforce Dynamics:

• The US faces a critical bottleneck in skilled manufacturing labor, with the Navy alone requiring 50 million skilled man-hours annually for submarine construction alone; advanced manufacturing training typically takes 10 years.
• Companies are addressing labor shortages by "de-skilling" processes via software and AI, allowing rapid (30-day) training for non-traditional candidates (e.g., nurses, high school graduates) to operate automated systems.
• Roles are merging: traditional trade workers (welders, machinists) are becoming engineers via low-code tools, while software engineers are moving into factory-floor product design.
• Investment is flowing into "middle America" (e.g., Alabama, Tennessee, Louisiana) to revitalize communities, with examples of shipyards in Franklin, LA, tripling workforce from 30 to 250+ employees within 90 days.

Shipbuilding and Industrial Policy:

• The "Golden Fleet" initiative envisions a hybrid manned/unmanned naval force, moving toward unmanned commercial shipping to regain necessary scale.
• The Jones Act is defended as necessary to sustain the domestic industry against subsidized Chinese competition, with new legislative efforts (SHIPS Act, Maritime Action Plan) aiming to expand commercial and defense shipbuilding.
• Allies desire US-built capabilities rather than replicating them domestically; China holds over 60% of global shipbuilding capacity, necessitating a rapid global restart of sovereign manufacturing.
• A $1.2 trillion shipbuilding plan over 30 years is in scope, with potential to double if new technology lowers unit costs and accelerates delivery.

Infrastructure and Geopolitical Constraints:

• Power availability and permitting speed (days vs. months) are identified as the primary infrastructure bottlenecks for manufacturing growth, favoring business-friendly states like Alabama.
• Data sovereignty is driving a shift from centralized hyperscalers to distributed, edge-based, and ruggedized compute to mitigate risks of drone strikes on data centers.
• Questions remain on whether domestic production can be maintained if allies or the US attempt to offshore warship modules, with panelists emphasizing the strategic necessity of sovereign domestic capacity.

Long-Term Outlook:

• Panelists predict the transformation of the defense ecosystem is non-reversible, driven by bipartisan support and the clear failure of past globalization strategies for critical defense capabilities.
• A critical mass for consolidation and M&A is expected in 2–3 years as prototyping cycles transition to production and undercapitalized firms exit.
• The "long tail" of government needs (single-use, niche problems) requires a dedicated support structure beyond traditional VC dual-use models, necessitating a mix of public and private capital.