The NatSec100 is intended to provoke urgent, informed dialogue about the state of the Defense Industrial Base (DIB) and the wider National Security Innovation Base (NSIB). Recognizing that every ranking has its limitations, our aim is not to declare winners but to inspire meaningful dialogue.
Serious discussion is needed around who is delivering, where the system is showing promise, and where reforms are needed most.
In 2025, the American defense enterprise faces a defining inflection point. Great Power Competition has returned in force. On the battlefields of Ukraine, we are witnessing a revolution in military affairs—defined by low-cost, attritable, beyond-visual-line-of-sight drones and rapid iteration cycles that vastly outpace the Department of Defense’s traditional R&D tempo. Innovation is no longer optional; it is the front line.
In this emerging era of techno-security competition to develop and deploy advanced technologies, the margins for victory are razor-thin. Although the United States continues to lead the world in breakthrough technologies, the Department of Defense lags dangerously behind in adopting them. To maintain our strategic edge, we must do more than innovate—we must accelerate adoption at speed and scale.
By spotlighting the companies driving change, the NatSec100 aims to illuminate our innovation pipeline and inspire action. SVDG remains committed to strengthening the connective tissue between government, industry, and capital—because in this race, the future belongs to the fastest adapter.
Setting the Scene
The 2025 NatSec100 reveals a powerful reality: innovation is no longer defined solely by creation—it is now defined by adoption.
Over the past decade, the national security enterprise made meaningful progress in catalyzing a new wave of dual-use innovation, largely driven by private capital and startup ingenuity. But the next decade will be shaped by the government’s ability to adopt, scale, and integrate these technologies into real-world missions. The companies in this year’s NatSec100 cohort are maturing, raising follow-on capital, and demonstrating growing operational impact.
At the same time, trends in contracting, workforce growth, and the rise of software-enabled capabilities in traditionally hardware-centric domains all point to an ecosystem ready for a new phase—where success hinges not just on invention, but on institutional uptake. The future of defense innovation will be determined not by what is possible, but by what is actually adopted.
In 2024, we saw a ~2.3x increase over prior year in DoD spend on NatSec100 companies. While encouraging, total spend consistently remains <1% of total DoD budget.
Who Are the Companies?
The 2025 cohort represents an unprecedented surge in private and public investment — a signal that non-traditional companies are no longer on the margins. They are front and center.
Turnover is not a flaw — it’s a feature. The NatSec100 is designed to reward momentum, and companies naturally rise and fall depending on where they are in their growth and delivery cycles. A healthy ecosystem is one where new players break through, while established ones mature and move to the next stage.
Of note, two companies in this year’s top ten are brand new to the list – Dataminr and X Energy. Both companies owned large commercial businesses ahead of announcing and forming their public sector defense business units. For this reason, commercial momentum propelled these companies to the top of our list.
Where Are the Companies?
The 2025 NatSec100 reflects both geographic concentration and growing dispersion. The majority of companies remain anchored in California, New York, and Texas — a reflection of long-standing advantages in venture capital density, technical talent, and proximity to key customers and research institutions. These states continue to serve as hubs for dual-use innovation, housing roughly two-thirds of this year’s cohort.
Yet expansion beyond the coasts is accelerating. A new wave of NatSec100 companies are building manufacturing lines, engineering hubs, and R&D centers across the country — from the Southeast to the Midwest and Mountain West. These are not satellite offices; they are major investments.
This shift carries strategic and economic significance. As companies expand, they are drawing from a whole-of-U.S. workforce — skilled operators, engineers, technicians, and veterans who may be far from Silicon Valley but are central to America’s industrial base. Geographic diversification helps de-risk the defense innovation ecosystem, strengthens national resilience, and ensures that the benefits of this new industrial wave are shared more broadly across the country.
Federal initiatives like the CHIPS and Science Act, DoD’s Microelectronics Commons, and regionally targeted SBIR programs are helping catalyze this footprint growth. But challenges remain: capital, talent pipelines, and DoD customer access are still unevenly distributed.
If the U.S. is to field a truly modern and resilient defense industrial base, the innovation pipeline must continue to stretch beyond traditional tech strongholds — activating the full spectrum of American talent and industrial capability in the process.
What Do the Companies Do?
The NatSec100 reflects the changing face of the U.S. defense innovation base. Over the past three years, most companies on the list have focused on technologies like advanced computing, software, AI, cyber, and space—technologies that attract strong private investment and that are aligned to some of the Department of Defense’s (DoD) critical technology priorities.
But this concentration also raises important questions. Are we doubling down on a few familiar lanes of innovation at the cost of building a more balanced industrial base? Despite national strategies that call for leadership in areas like quantum, biotech, and clean energy, those sectors remain underrepresented on the list—even when companies in those fields show real promise and are ranked highly on our list.
This lack of balance has consequences. We can’t build a resilient defense innovation base on software alone—even if it remains central to modernization efforts.
We’re also seeing consolidation within sectors. Space, traditionally a fast-moving area for dual-use innovation, now shows fewer breakout companies beyond SpaceX—likely due to more government and investor dollars flowing to fewer players. At the same time, interest in AI and autonomy continues to dominate the conversation and funding landscape.
Still, we should not ignore major signs of progress. Companies like Netskope and Cerebras are eyeing IPOs in 2025, pointing to the reality of strong dual-use national champions with roots in the defense technology venture ecosystem. Where and when the USG policy environment supports long-term growth, the U.S. wields globally competitive firms that deliver for national security.
Who Works at the Companies?
The 2025 NatSec100 reveals a clear trend: the dual-use workforce is rapidly scaling. The median company increased its headcount by more than 100 employees year-over-year — a signal that early-stage startups are maturing into real, durable companies with growing operational demands.
This growth isn’t hypothetical. These companies are hiring engineers, machinists, program managers, supply chain leads, manufacturing technicians, and security-cleared specialists — building out the talent infrastructure required to deliver at scale.
It reflects a virtuous cycle: as more capital flows into dual-use startups, they’re able to build the teams necessary to pursue and fulfill national security contracts.
Yet this growth also reveals a brewing imbalance. While the NatSec100 companies are hiring at pace, headcount within the U.S. Government — particularly within the acquisition workforce — continues to decline. The number of Contracting Officers, Program Managers, and technical evaluators is shrinking just as the volume and complexity of innovative commercial offerings is increasing.
Where does this end? Without a corresponding investment in government-side talent, the gap between capability supply and acquisition capacity risks becoming a structural failure point. No matter how fast startups grow, if the Department lacks the personnel to solicit, assess, and onboard these technologies, the system bottlenecks.
Who is Funding the Companies?
Over the past year, we’ve seen a significant increase in private investment across the NatSec100 cohort — with total venture funding up 32% compared to 2024. This growth is being driven by venture capital, growth equity, and crossover funds (e.g. mutual funds and hedge funds making late stage private investments) that increasingly recognize dual-use technologies as both strategically important and commercially viable.
Over the past year, we’ve seen a significant increase in private investment across the NatSec100 cohort — with total venture funding up 32% compared to 2024. This growth is being driven by venture capital, growth equity, and crossover funds (e.g. mutual funds and hedge funds making late stage private investments) that increasingly recognize dual-use technologies as both strategically important and commercially viable.
But the public sector is not scaling in parallel. Total U.S. Government spending across the NatSec100 cohort has grown modestly, and remains concentrated at the very top of the list — meaning a small handful of companies capture a disproportionate share of prime contract dollars, while the rest compete for crumbs. Despite rhetoric around diversifying the industrial base, the reality is that emerging players are still not seeing meaningful, programmatic contract dollars at scale.
The $41.5B gap between private investment and federal revenue matters. The market is telling these companies to grow — and investors are backing them. But the Department of Defense has not yet built the contracting infrastructure or funding flexibility to meet the moment. Until that happens, we risk a two-speed ecosystem: one where private capital continues to surge ahead, while public dollars remain tethered to legacy processes and incumbent primes. Ultimately, this is not sustainable and we risk ecosystem momentum collapse.
How Are the Companies Working with USG?
For NatSec100 companies, operational impact is increasingly reflected in government contract data—from traditional FAR-based awards to more flexible tools like Other Transaction (OT) authorities and SBIR/STTR grants. These pathways show how well startups are breaking through bureaucratic hurdles to deliver real-world capabilities.
More NatSec100 firms are now securing meaningful contracts from U.S. government agencies. The Air Force and U.S. Special Operations Command stand out as frequent adopters of emerging tech, particularly in AI, autonomy, and dual-use software. Their willingness to use agile contracting approaches makes them key entry points for nontraditional vendors.
One major trend is the rise of OT authority use, which helps the government partner with innovative companies outside the traditional defense base. Many NatSec100 firms, especially in autonomy, cyber, and edge computing, are using OT-based agreements or Commercial Solutions Offerings (CSOs) to gain traction. This reflects a broader shift in acquisition strategy, as agencies acknowledge that legacy processes are too slow to keep up with innovation.
The 2025 NatSec100 cohort shows progress—more contracts, better access to receptive agencies, and increased use of flexible authorities.
Still, challenges remain. Although designed for early-stage R&D, SBIR/STTR programs are not consistently embraced by leading non-traditional companies. These awards are often seen as too small, slow, or disconnected from a PoR finish line to be worth the effort. Only 50% of the 2025 NatSec100 companies have received an SBIR/STTR grant. A concerted effort to reduce “SBIR Mill” companies will also prove helpful to improving today’s SBIR/STTR program.
In the end, government adoption still lags behind the pace of private capital.
A Moment of Strategic Reckoning
The NatSec100 report — and the broader mission of the Silicon Valley Defense Group — emerged from a recognition that the U.S. defense enterprise needed to prepare to absorb a future inflection point. That moment has arrived. Today, the United States can no longer assume uncontested dominance over the global commons. Strategic competitors are advancing, battlefield conditions are evolving rapidly, and our defense acquisition system remains mired in a status quo built for a different era. We are navigating 21st-century threats with largely 20th-century tools, while existing tools, like OTAs or CSOs, are likely underutilized. Success will require improved use of existing toolboxes and the initiation of new acquisition mechanisms and reforms.
The Readiness Gap
America’s entrepreneurial technology ecosystem — particularly the dual-use venture-backed sector — is one of the country’s most powerful untapped assets. Yet the national security enterprise has not adapted to harness it fully and effectively. While promising technologies exist across autonomy, cyber, space, and advanced software, the systems for acquiring and scaling them remain slow, risk-averse, and misaligned with operational urgency. The result is a growing gap between what is technologically possible and what is tactically deployable. We must fix this readiness gap before it becomes a strategic vulnerability.
A Wake-Up Call from Ukraine
Recent events in Ukraine have underscored the dangers of delay in adapting to modern, asymmetric warfare. In a paradigm-shifting drone strike earlier this year, Ukrainian forces employed first-person view (FPV) drones deep into Russian territory, demonstrating not only bold operational tactics but also the disruptive potential of pairing commercial software with low-cost hardware. This form of asymmetric engagement enables drone units to deliver levels of lethality once reserved for armored brigades or close air support — at a fraction of the cost. According to the Ukrainian 92nd Assault Brigade, a $100M drone unit can execute 5,000 lethal strikes annually, bringing the per-strike cost to just $20,000. This level of efficiency and impact is unmatched by traditional U.S. defense systems and illustrates how asymmetric technologies are redefining battlefield dominance.
The Next Revolution in Military Affairs
These developments may mark the beginning of a new revolution in military affairs — one defined not by new exquisite platforms or decades-long procurement cycles, but by the rapid iteration of commercial tech, highlighted in the proliferation of attritable, low cost, high impact, autonomous systems. The Ukraine case exemplifies a future in which software-defined, networked, and decentralized systems dominate the battlefield. If the U.S. does not reengineer its acquisition, development, and deployment models to match this pace, it risks falling behind both allies and adversaries.
Recommendations
This shift from invention to implementation demands a recalibration of effort. The focus must move beyond experimentation and prototyping and toward contracting, fielding, and sustainment. Simply put: energy, attention, and political capital must now be invested in buying innovation, not just finding it.
Over the past several years, the Department of Defense has made significant strides in recognizing the importance of non-traditional defense technology. Today, efforts are being made at streamlining innovation pathways. The data reflects such, as seen below.
However, SVDG concludes that innovation alone is not enough. What matters most is innovation adoption—it is time for the U.S. government to move past a focus on identification of promising technologies, and to deploy technologies at scale in mission-relevant contexts. Our adversaries don’t differentiate between “defense innovation” and “defense.” Nor should we. We must adopt this mindset.