Commercial viability can be the biggest enemy of emerging technologies. It takes years for novel, capex-intensive innovations to build a big enough market to survive in.
Historically, therefore, many entrepreneurs have found that there are few better customers of innovation than the military.
Take semiconductors. Microchips are ubiquitous now in countless consumer and business-facing industries. But long before every new car, phone or washing machine needed dozens of microchips, the industry’s pioneers funded their early research through lucrative contracts with the Pentagon.
Similar patterns can be seen in technologies as varied as microwaves, touch screens and superglue.
AI – or AI in the modern post-ChatGPT understanding – is a little different. Entrepreneurs at the frontier of the industry haven’t struggled to pull in vast investments from the private sector and there are thousands of businesses globally incorporating the technology into their services.
But while the AI industry has benefited from investor hype, the financial returns have so far left much to be desired.
Recent research from the asset management firm Bowmore has found that funds targeting AI ventures have delivered an average return of just 2.5% in the past year – miles behind the likes of fintech, cybersecurity and gaming.
For technology that is meant to fundamentally reshape life as we know it, those figures are a little underwhelming.
Developers are making advancements in AI every day and the lofty R&D costs for doing so mean the industry needs to either keep convincing investors to back untested markets or start generating funds the old-fashioned way, by selling products to customers.
This is where the military comes in. The world’s defence departments tend to become benefactors of technological innovation in times of crisis.
For the semiconductor industry, the Cold War made the American military desperate to fund tools that could give it a technological edge over the Soviets, and luckily for AI, 2025 is offering no shortage of geopolitical conflicts to encourage a similar attitude.
This week’s otherwise lacklustre Spring Statement saw Chancellor Rachel Reeves commit an additional £2.2bn to the Ministry of Defence, alongside a pledge to dedicate a minimum of 10% of the department’s budget on “novel technology”, notably AI and drones.
This isn’t just a measure to beef up British security amid threats from foreign actors, but also an attempt from Reeves to “put defence at the heart of our industrial strategy to drive innovation that can deliver huge benefit back into the British economy”.
A renewed focus on generating economic returns for the defence industry is one thing, but if history is anything to go by, the AI developments that occur as a result of conflict could spawn massive innovation in the civilian market.
“An increase in defence spending will help drive the development and adoption of world-changing dual-use technologies that can benefit the UK’s front-line defence, as well as having broader civilian applications,” Tanya Suarez, CEO of IoT Tribe and lead of Janus accelerator told UKTN.
Janus is an initiative led by IoT Tribe on behalf of the MoD-operated Defence and Security Accelerator tasked with strengthening the UK’s position within NATO’s Defence Innovation Accelerator for the North Atlantic (DIANA) initiative.
“Necessity is the mother of invention. Human ingenuity is often at its best in times of crisis and given the geopolitical situation we’re currently finding ourselves in, I fully expect the UK’s AI community to rise to this unprecedented challenge.”
This new flood of defence spending could be just what the AI industry needs to continue to innovate its technology for military and consumer applications. But (surprisingly) creating automated super weapons doesn’t come without risks.
The US’s Cold War chip supremacy inspired its international rivals to pour billions into similar programmes, and the same will likely happen for AI.
Therefore, if the British military and its allies are set on funding a new era of AI technology, it must be ever-more aware of the dangers and double down on efforts to enforce safety requirements.
“We absolutely need to move fast, but not at the expense of control or oversight,” added Suarez.
“There has always been a tension between speed and safety in technology development – this isn’t new. But in defence, the stakes are higher, so we need to act early, not retrospectively.”
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