Defense- & Dual-Use Technologies Edition

Late, Flat, and Fragmented

The FY26 defense budget request is in. What it says about technology, procurement, and political dysfunction.

Jun 27, 2025

Good morning!

After last week’s excitement—mega-rounds of venture funding and lingering questions about Iran’s nuclear program following U.S. strikes—this week has felt comparatively subdued.

The biggest news? The White House finally delivered the President’s Budget Request (PBR) to Congress. Only 144 days late.

We haven’t done a full dive yet, but here are some topline impressions:

Flat or declining defense budget when adjusted for inflation, relative to FY25.
The administration is pushing its ‘Big, Beautiful Bill’ (BBB) to raise total authorizations for FY26.
Given the late PBR, Republican infighting over spending, and broader dysfunction, we’re likely heading for a full-year continuing resolution. Even if the BBB passes, an appropriations bill seems far off.
Legacy procurement is getting trimmed—including a ~30% reduction in F‑35 buys.
Meanwhile, there’s heavy investment in long-range standoff weapons, drones, and missile defense (especially the ‘Golden Dome’ system).

The takeaway: Advanced technologies remain central to defense planning. And with that, we’ll likely see continued efforts to pull Silicon Valley deeper into the defense ecosystem.

News Headlines

Trump says whether he'll commit to NATO mutual defense guarantee 'depends on your definition' (AP)
Trump claims U.S. and Iran will hold meeting next week (AX)
Zelenskyy will sign off on special tribunal to prosecute Russian leaders over Ukraine (AP)
China, U.S. confirm trade framework agreement (DW)
SecDef Hegseth angrily defends Iran strike after initial reports cast doubt on effects (MT)
Iran's Ayatollah Khamanei surfaces to warn U.S. against future attacks (AP)
As the U.N. turns 80, impotency appears to plague it (AP)

The Pentagon has finally released its very overdue budget request (MT)
Billions for new drones and counter-drone tech included in new budget (DS)
Air Force wants $387M in FY26 to start producing its hypersonic missile (DS)
Air Force cancels E-7 Wedgetail due to survivability, cost concerns (BD)
The Army weeps as the Air Force to retire all A-10 Warthogs by 2027 (FG)
Army to combine Multi-Domain Task Force with artillery command in Europe (SS)
Navy CTO unveils list of priority areas for tech investment (DS)
Pentagon to consider SpaceX alternative for Space Force satellite program (SN)

Threat Tech

China to host military parade, offering insights into newer systems (MP)
China analyst: Iran raid result will be a surge in Chinese military intelligence collection efforts on U.S. bombers (WT)
Chinese AI companies are exporting their infrastructure to lock-in foreign markets to Chinese AI standards before the west can respond (RT)
Iranian-backed hackers go to work after U.S. strikes (AP)
Drone debris in Ukraine shows Russia is using new Iranian tech (AP)
Ukrainians re-rank Russian high-value targets, tanks have fallen far from the top (BI)

Foreign Defense Tech

Lawmakers press the administration on AUKUS nuclear sub deal (TH)
Hackathon teams race to solve defense tech challenges as Europe boosts military capabilities (ABC)
German cabinet passes 2025 draft budget, doubling defense spending (RT)
Italian navy taps Fincantieri to top up patrol fleet with two new ships (DN)
Sweden inks $900M IRIS-T air defense deal through European Sky Shield Initiative (BD)
U.K. to buy 'at least' a dozen F-35s, 'join NATO's nuclear mission' (BD)
The Royal Air Force can't refuel those jets, though (DJ)

Defense Industry

Europe is pouring money into defense, raising questions if U.S. firms reap rewards (BD)
Castellum launches new subsidiary to focus on 'advanced tech' (ST)
Australia's DroneShield secured $40M contract for European military (AT)
Ondas and Mistral sign strategic partnership to accelerate defense sales for autonomous systems (NwW)
SAIC wins $928M contract to bring advanced technology to the Air Force (ST)

Autonomous Systems

China military unveils mosquito-sized drones for 'special missions' (NW)

Finance & Deal Flow

Funds

China's SWF CIC canceled its planned $1B sale of American PE LP stakes tied to funds like Carlyle, KKR, and TPG (BBG)

Carlyle is launching new funds aimed at individual investors to buy and sell secondaries PE stakes (BBG)

VC firm Project A raised a $373M fund to invest in European startups, with a focus on defense (BW)

VC

Industrial AI startup PhysicsX raised a $135M Series B led by Atomico (TEU)

Indian drone startup Raphe mPhibr raised a $100M Series B led by General Catalyst (TC)

Obviant raised a $7.1M seed round led by Shield Capital to use AI to increase transparency into defense procurement (BW)

PE / M&A / Exits / Other

Malaysia's largest port operator MMC Ports confidentially filed for an IPO that could raise ~$2B at a $7B valuation in the country's biggest IPO in a decade (TS)

Rare earths refiner Phoenix Tailings aims to go list within three years (BBG)

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Exciting Opportunities

DARPA is seeking biotech research proposals for its CoasterChase program focused on monitoring and modulating biomarkers of acute stress from within the small intestine (SAM)
DARPA is looking for partners to help build an integrated subscale relay to operate at altitudes >1.5km for its 6-month power beaming phase 2 demonstration as part of project POWER (SAM)