Most defense startups will die in the 'Valley of Death'
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- Anduril doubled its valuation and Mach Industries quadrupled its, fueling a red-hot defense tech market as a wave of new startups chase government contracts.
- The U.S. government is proposing a 40% increase in the defense budget, drawing even more capital into the sector.
- Ross Fubini, founder and managing partner of XYZ Venture Capital and the writer of Anduril's first check, warns that most defense startups will get lost in the 'Valley of Death' between a prototype contract and a real production deal.
- XYZ Venture Capital is built on the Palantir alumni network and is approaching $2B in assets under management, giving Fubini's survival benchmark outsized credibility.
- Fubini broke down what separates the survivors from the rest on TechCrunch's Equity podcast, interviewed by Rebecca Bellan.
Why it matters: For the wave of defense startups chasing the proposed 40% defense budget increase, Fubini's warning carries weight: he's the VC who wrote Anduril's first check and now runs a nearly $2B AUM firm. His point — that capital is easy but the prototype-to-production gap kills most — is the real filter for who survives the boom.
