Ask HN: How do defense startups work?

You seem to have a very specific idea of "defense startup" as something focused on ordnance? munitions? general explosives? Most defense startups are not in that arena, they are in, broadly, information systems, intelligence, and logistics. Others are in communication systems (satellites, radios), cryptography, sensors, drones (these days), etc. Personnel and cargo transport are largely the domain of established players, but if you think you can make a next gen helicopter, ship, ground transport, etc. as a startup it's an option, too.

For all of those, there happens to be a lot of overlap (but not always as steady income) with commercial sectors. Remote sensing, for instance, is big in many industries like oil, agriculture, and even power and telecom (better ways to inspect deployed infra than sending out a person to climb towers or drive along lines through remote regions). So the feast and famine cycle can be mitigated, should defense funding dry up, by dual purposing the systems and the startup's general capabilities.

For the explosives and delivery systems:

The big difference between a defense startup and some nerds blowing things up in the desert would be discipline and proper engineering. Your best bet would be to recruit current or former DoD engineers who already know this stuff, they do it for a living. Either from bigger contractor firms, civil service ranks, or current officers and enlisted (the latter will have a good grasp on the regulations in this situation as a lot of the time they end up tasked with learning and enforcing them). Look to the research labs and existing test ranges to find people. You will also likely end up located at one or more of the various ranges because getting time there will probably be easier than all the environmental assessments you'd have to do to acquire and operate your own range.

You can look into the SBIR program from the federal government (www.sbir.gov/). Every federal agency with significant research dollars is supposed to participate in this program to help provide seed money to small businesses.

Each agency is slightly different but the gist is...

- Every year (or quarter or whatever) the agency will put out requests for grants. Some may be specific, some more vague. Examples might be the Navy wants to fund research in new glass material for underwater windows, or the department of energy wants new ways to monitor wind turbine health, etc

- grants are broken up in phases, so phase 1 may be $150k/6 months, phase 2 is $1M/12-24 months

- you write a proposal and submit it! It is evaluated by the strength of the statement of work and team.

- the idea is that ultimately you can commercialize the product! You should already have one customer :)

- What distinguishes a defense startup apart from just some nerds "blowing things up in the desert"?

Security clearances

- Aside from accidents in testing, what are the common pitfalls of this field of study?

The government can be very difficult to work with and slow. They may love what you do but vetting and delays and lazy people can sink you

- Are there stories that come to mind about notable contractors that encountered problems? Notable successes?

Yes. Bits Systems and Zeta Associates.

- What legal risks are there in the development and procurement process? I'd assume just by virtue of searching certain topics or even acquiring parts you'd be having some very serious conversations with officials. Do these startups have a formal way to announce their intentions ahead of time before trouble erupts?

Everything falls under a classification regime and even unclassified stuff is usually subject to ITAR

- What is the general consensus of this field when it is not war time? Is it generally feast or famine, or is the demand for defense tech relatively constant?

Depends on what you do. The IC is always looking for better tools, and there’s huge overlap between defense and space. Can’t build missiles? Build satellites

- Are these startups typically VC funded on the open market, or does your government typically fund ideas it needs/wants?

Both. The government may give a contract where they pay as development happens. But there’s also groups like In-Q-Tel which operates as a standard VC fund focusing on defense and intelligence.

- What are the limitations of the concepts that may be researched? Surely you can't just come up with an idea for a particle disintegrator and start vaporizing cacti in the wild. Are defense contractors generally limited to missiles and things of that sort?

No. Most of defense contractors do work on software in some capacity. For weapons, you leave it to the major defense contractors.

- What are the dominant traits that contractors generally have that make them a good fit for this field?

Understanding of the legal regime they operate in. Having an existing security clearance. An appreciation for the mission.

Ronnie Barrett’s story might interest you, he was working as a photographer when he began development on what would become the M82 rifle. His company is now well known in both the commercial and .gov small arms world.

At a federal level in the US, licensing for traditional weapons development (outside of nuke/chem/bio) is pretty accessible and relatively cheap. Dual use tech and services work mostly just like any other consumer startup. The marketing and sales/RFP process for the government is what’s unique.

> What distinguishes a defense startup apart from just some nerds "blowing things up in the desert"?

Government money?

Yeah, pretty much the same difference between a pirate and a privateer.

> What distinguishes a defense startup apart from just some nerds "blowing things up in the desert"?

Connections formed over the years of being part of the military industrial complex. Colonel or general rotates out of a job from the Pentagon to a big defense contractor, to a think tank, to a CIA gig, to a major media talking head job, back to a defense contractor, and so on.

It is almost unheard of that startups of the kind you seem to be imagining make any inroads in government procurement. It is deeply corrupt and does not resemble what you would imagine to be an open market.

DARPA funding through university research then spinoff is a legit path. Best of Luck ;)

How to Work with DARPA: Mechanics and Semantics

https://www.darpa.mil/news-events/how-to-work-with-darpa-mec...

Well, the "Ready, Fire, Aim" approach to development definitely does not apply...

Just like with any government agency, you bid on something called "Small Business Set Asides" and get or say you are a minority woman. This will give you bonus points and contracts that are reserved for these groups. All government bids are open and if you google it, it will take you to websites which has these contracts listed and how to bid.

https://www.sba.gov/federal-contracting This site is pretty good on the process, on that page you can look and see the "Federal Procurment system" and it has a link to it, which shows all open bids on contracts. They also have another link on there which has small business set asides.

I'm not exactly in the space you are talking about, but in the USA, we have two broad categories for this stuff, ITAR and EAR. ITAR is the set of regulations that covers technology that only have one use, government (think missiles/night vision goggles/combat body armor). The EAR covers everything that can be used by both the government and consumers/enterprise (think quantum computing, AI, green tech, and cybersecurity), aka dual-use technology.

The difference between a defense start-up and nerds blowing up stuff in the desert is the relationship with the federal government allowing the nerds to blow stuff up. A big pitfall is not knowing you need the governments permission to blow stuff up beyond a certain size. And if you innovate in the field of blowing stuff up, and inadvertently let north North Korea learn about it, you're probably going to jail. I'm not an attorney so I can't speak to other legal risks, but watch for regulatory violations.

Generally, these types of innovations happen inside of institutions that have the capacity to comply with regulations and develop the idea. But if you invent something valuable in your garage, the path forward is probably via a SBIR/STTR grant through whatever part of the government your invention relates to. As part of that grant, you become would 'known' to the government. Other routes that I am unaware of may also exist.

I think the demand for innovation has always been there, but I think it's ramping up since Biden took office. It seems less a function of any looming potential conflict, and more a function of new funding/initiatives.

If you qualify, the government will give you a SBIR phase I and II grant as a form of non-dilutitive investment, and after that, phase III can go any number of ways. That's when VC usually gets involved.

I don't think there is a limit on the research for particle disintegrators, the limit would be on the commercialization and sale of said particle disintegrators. I'm sure the ITAR regulations have the answer somewhere in there, but check with an actual attorney before researching particle disintigration tech.

The dominiant traits, you are a US citizen, your company is owned by US citizens, the work is only done on US soil, and you aren't explicitly banned by the government (they have a list). Military experience, and federal experience and networks are very helpful, but not required if you've got a great idea.

I hope this helps. I'm still trying to figure this stuff out for myself.

I’ve seen a few tirades on HN along the lines “the kids are going into FAANG and useless startups instead of working on DARPA projects”.

99% of the time when I try to learn about some program or opportunity with the federal government I get met with most most hostile website on earth which seems to be intent on not giving me any useful information.

Lol yep. From my experience hiring can be much slower as well

It used to be that the government would explicitly solicit for somebody to build them a particle disintegrator. If that was your business, you could then apply for a grant based on that solicitation. Recently, they have added something called “open topic”, which is basically for anything that the government would find useful but isn’t smart enough to ask for, from ray guns to open source cybersecurity projects. I think if it’s related to either blowing things up, or preventing things from getting blown up, uncle sam wants to talk to you!

Here are the big-name defense contractors that are US-based: Lockheed Martin, Raytheon, General Dynamics, Boeing and Northrop Grumman.

Lockheed Martin, Raytheon, General Dynamics and Northrop Grumman are almost entirely (if not entirely) focused on work for the military. Boeing has lots of their own commercial stuff, but they also do work for the military. The work these companies do is pretty broad. They can make fighter jets, but also custom software.

The military tends to get funding for certain projects, and then seeks out contractors to research, build or manufacture things for them. In some cases, they may split budget between multiple companies or organizations. The military tends to select companies or organizations with demonstrated expertise in a project area.

I was on a DARPA project, and when DARPA announces projects, you have to apply to be selected. The money from our project wasn't funded by DARPA directly, but rather via the Air Force Research Labs. All of the companies or organizations that were selected for the collaborative research team I was on, were experts in some privacy-related area (usability, data storage, AI, differential privacy etc). I worked for a big-name university which was awarded a contract, and we were held accountable for how we spent the money. Keep in mind, congress keeps an eye on these budgets. We also didn't strictly do research, we were expected to produce something tangible and had to put in an honest effort to transfer the technology to the public.

So when you talk about startups and VC funding, I can't imagine there are too many (if any) of those kinds of companies around. A VC is going to invest in a company, because that company is producing a product that is going to get them a return on their investment. If the government isn't awarding contracts to your startup, then you aren't making money. Think back to SpaceX vs Blue Origin, and how much money Bezos lost on that NASA contract. One of the companies I worked with that gets awarded DARPA money was started by an ex-DAPRA project manager. They had connections. Other companies who did contracting work for the military were well-established and have a track record of delivering quality. You just won't really see college-aged kids come out with an idea for defense, get a ton of VC money and then start working with the government. Chances are more likely that they will build some product that has relevancy to the government, and thus the government becomes a sort of side-customer. College-aged kids just aren't really established enough to be taken seriously for these kinds of things. They may get to work on those projects during the course of their research at university, though.

For things like limitations on research, as mentioned above, you will be awarded a research grant for a specific project. Your limitations are scoped to that project. The military (DARPA in this case) could hypothetically decide a particle disintegrator is worth researching, and then call for people to apply if they got funding for it. You will see companies and universities applying for this work. DARPA project managers tend to be experts in a specific area. The project manager for Brandeis (the project I was on) is an expert in cryptography. So you won't see random people coming up with random ideas. The project managers have to come up with a project that is worth getting funding on, which isn't easy as I understand.

For legal stuff... one of the organizations on the DARPA project I was on ended up developing technology that the military decided to keep secret. I don't know if those individuals ended up getting a security clearance or what, but they weren't allowed to discuss the work with other team members who weren't involved. Typically a contractor will want to see US Citizens and ask that they get a security clearance, but sometimes there is work that doesn't require a clearance. As mentioned in another post, you do have to consider laws like ITAR especially if you start using HTTPS and other encryption methods. If it is a DARPA project, there shouldn't be any "legal" issues that randomly prop up. They keep in touch with you, so unless you keep things a secret from them, that shouldn't happen.

In today's world, governments are more interested than ever in innovative technology that can help protect their citizens. The military, police forces, and other security agencies are all looking for ways to perform their duties more efficiently, safely, and effectively.

But many of the companies that have the knowledge and capabilities to help are small startups working in a highly competitive market. Getting noticed by a government buyer is difficult since they only purchase from large businesses; small companies need to grow into large ones before they can do business with government agencies, but government contracts are the way to make this happen.

The goal of defense startups is therefore to get acquired or go public so they can be seen as legitimate suppliers.

This means that although they may start out as nonprofits or charities at first, they eventually become commercial enterprises with stockholders and executives.