Defense Tech Spending Doubles, Remains Under 1%

Pentagon spending on defense technology from startups has seen a significant increase, rising from approximately $1.8 billion in Fiscal Year 2023 to $4.3 billion for Fiscal Year 2025. Despite this doubling, this investment still represents less than 1% of the total contract dollars awarded by the Department of Defense. Rachel Hoff, policy director at the Ronald Reagan Institute, discussed this trend, highlighting the substantial growth in funding for innovative defense solutions while acknowledging its relatively small share of the overall defense budget. This suggests a growing but still nascent ecosystem for startup-driven defense technology.