Predictions for 2023
Our look at the year ahead in defense technology.
Building and investing in startups effectively means having theses about where the world is headed. To start the year, we’re predicting the trends and innovations we believe will shape the defense tech sector in 2023:
Increased investment in defense technology. We expect both private and public investment in defense technology, specifically software, to increase significantly over the next few years, with a particular focus on artificial intelligence and machine learning. This trend will be driven by the recognition that these technologies have the potential to revolutionize the way that military operations are conducted, by enabling faster and more accurate decision-making. We predict investment in AI and ML toward cybersecurity measures will also increase as warfare evolves and the threat of cyber attacks grows. Governments and military organizations will prioritize investing in these technologies (as part of the $816 billion defense budget) to protect their sensitive data and systems, and private investors in the firms that build the technologies will take note.
Collaboration with startups. We expect to see an increasing trend of government agencies and military organizations collaborating with smaller, innovative startups. Through its procurement policies and funding for research and development, the government has the power to shape the landscape of the defense tech industry. The government is incentivized to do so, in order to tap into startups’ innovative capabilities and bring new technologies to market at a faster pace. Startups often have the flexibility and agility to develop and implement new technologies quickly, which can be beneficial for the government and military hoping to stay ahead of potential threats. This collaboration will likely lead to the success and growth of more startups, as well as the development of new, cutting-edge technologies. Larger defense primes will acquire these startups to build out their software capabilities, as the default structure of these larger organizations tends to support hardware-first operations. A continued challenge here will be translating government desires with actual, monetary outcomes – one of the biggest hurdles historically.
Emphasis on interoperability. As the defense tech industry becomes more complex and diverse, we expect to see a greater emphasis on interoperability. It is in the government’s best interest to mitigate risk by relying on multiple software providers as opposed to a single platform. Thus, disparate technologies and systems should be able to communicate seamlessly and work together, rather than being siloed and unable to integrate. Interoperability will be crucial for the efficiency and effectiveness of military operations, and we predict that investment and innovation in this area will increase in the coming years. The use of open source software will also become more widespread within the defense tech industry, as the military and startups seek to take advantage of the lower costs and increased collaboration that these platforms enable. This trend will be driven by the recognition that open source software can be more secure, reliable, and flexible than proprietary alternatives.
Increased use of virtual and augmented reality. We predict that virtual and augmented reality will become increasingly prevalent in the defense tech industry as tools training and simulation. These technologies allow for realistic and immersive experiences, which can be highly effective for training military personnel and preparing them for real-world scenarios. We also expect to see the use of virtual and augmented reality for mission planning and tactical decision making. The military’s investment in simulation and training is not new, but we predict it will translate more to operational capabilities, like a clearer path ahead for the IVAS or similar lightweight, high impact tools.
Focus on force health. We expect to see the development of new technologies and therapies specifically geared towards addressing the unique health challenges that military members and their families face. Specifically, mental health conditions and insufficient mental healthcare resources increasingly affect military members and their families, resulting in lower morale, worsened resilience, and weakened combat readiness. We expect to see a shift toward teletherapy and virtual therapy sessions as a way for veterans and their family members to access quality healthcare from anywhere. We also predict that there will be more emphasis on mental health education and support for military personnel before, during, and after deployments or significant events. With our country’s myriad of health issues becoming a national security threat, we expect the military to focus on innovations that improve the physical and mental health and readiness of the community, including active duty servicemembers, their families, and potential recruits.