Defense tech startups close major funding rounds

Venture capital firms are betting big on two Northern Virginia-based defense contracting startups that are promising high-tech solutions to military challenges. In August, McLean-based Defcon AI announced it had raised $44 million in seed funding led by San Francisco investment firm Bessemer Venture Partners. The same month, Parry Labs in Alexandria raised $80 million in its first institutional funding round, led by Capitol Meridian Partners.

That both are headquartered in NoVa should come as no surprise, says Defcon AI CEO Yisroel Brumer, a quantum physicist who spent 15 years at the Pentagon before becoming a founding partner of Defcon AI’s parent tech incubator, Red Cell Partners. “The quality of senior leaders in the area is outstanding,” he says. 

Red Cell launched Defcon AI in 2022 to address the Department of Defense’s need to field operational artificial intelligence at scale to maintain advantages on the battlefield. Defcon’s first product is Artiv, an operational mission planner for contested logistics environments.

“There is a challenge integrating real operational defense expertise with real revolutionary software engineering. There’s a lot of organizations that have one of those two things. Very few organizations have both of them,” Brumer says. “And that’s what Defcon was really stood up to do: to bring in four-star generals, operators, people who deeply understand defense operations and the kind of revolutionary software engineering you see in Silicon Valley and create a culture where the two could talk to each other, which is actually the hard part and where the pain is.”

Meanwhile, Parry Labs was co-founded in 2015 by defense sector veteran-turned-entrepreneur John “JD” Parkes, who previously worked as airborne mission lead in the DOD’s Office of Strategic Capabilities.

“We wanted to make integrating and installing and implementing new software and systems on military applications significantly cheaper and faster. Today we call that or call ourselves a digital system integrator,” Parkes says. “What we’re focused on is delivering zero-trust cybersecurity environments over-the-air updates, really good standardization of data, and then easy accessibility to these environments for mission and safety critical environments.” 

The two companies are contributing to a record-breaking year in which defense tech startups in the U.S. raised $2.5 billion by August, according to data from Crunchbase.com. That figure surpasses the 2023 total of $2.1 billion and is on track to surpass 2022’s record high of $2.6 billion.