As Britain, Europe and the world-at-large face global threats, increased investment in defence tech has to move beyond the legacy institutional names and towards cutting-edge startups, according to the head of Future Planet Capital.
Douglas Hansen-Luke is the founder and executive chairman of Future Planet Capital, a VC firm that, among other things, manages investment funds backed by the Ministry of Defence.
In an exclusive interview with UKTN, Hansen-Luke applauded what appears to be the end of “decades of underinvestment” in defence, championed in part by Chancellor Rachel Reeves who has made defence tech funding a priority amid the ongoing conflict in Ukraine.
However, the Future Planet Capital boss warned that this will be ineffective if public and private funds are directed towards entrenched industry titans.
“You cannot blame the Ministry of Defence. They work in an ultra-large bureaucratic institution where people don’t want things to go wrong because it’s taxpayer money.
“If you’re looking to invest or to purchase with a low-risk appetite, then you’re going to invest with those brand names that everyone knows, you’re going to talk to BAE Systems or Lockheed Martin because they are household names that are themselves very large, bureaucratic organisations.”
So, while the strategy is understandable, it has also created an environment of slow procurement and a lack of creativity, both of which could be solved with a greater focus on startups.
For Hansen-Luke, the startup venture capital model comes with plenty of risks, but those risks must be accepted.
“When you’re investing in companies, some of them will fail.” Hansen-Luke pointed to the unofficial motto of Silicon Valley, first coined by Mark Zuckerberg – “move fast and break things”.
“It is not that different from the military, who are also meant to move fast and break things.”
Hansen-Luke acknowledged the promising signs from the government, particularly regarding the goal of faster procurement from startups and an increased budget to invest in emerging defence technologies.
He noted, however, that while more money is beneficial, the real priority needs to be “smart money”. This means longer-term investment strategies that emulate the VC strategy of finding the next great startup and giving it enough support to produce the desired return.
When it comes to defence in particular, he argued, there must also be a greater sense of urgency, such as what was seen during the covid-19 pandemic.
“We were all working at crisis speed, right at hyper speed, because of the immediate threat, which we all understood,” Hansen-Luke said.
“We are living in a security crisis,” he said. “Let’s open up our military to be able to prototype and to pilot.”
Read more: Speed, Scale & Sovereignty: UK Tech’s Defence Opportunity
The post Defence tech must look toward startups appeared first on UKTN.
