In a late-June meeting with more than a dozen of the nation’s top defense technology firms, Defense Secretary Pete Hegseth had an urgent message: The Pentagon needed their help to rapidly replenish America’s weapons arsenal.
Outside the room, the United States was mired in a conflict with Iran that was rapidly depleting U.S. stocks of missiles and interceptors. According to three people familiar with the meeting, some of whom spoke on the condition of anonymity to discuss sensitive information, Hegseth told executives that their companies would be critical to restocking the nation’s supplies.
The meeting, several details of which were previously unreported, underscores a pivotal shift in the U.S. defense industry. With the Iran war consuming vast quantities of precision munitions and relying less on ground troops or drone warfare, the Pentagon is leaning on venture-backed startups to solve one of its most pressing problems: rebuilding America’s weapons stockpiles at speed.
The meeting was filled with the Pentagon’s top brass, including Steve Feinberg, the deputy defense secretary; Emil Michael, the undersecretary of defense for research and engineering; and Michael Duffey, the Pentagon’s top acquisitions official.
Leading defense tech firms were summoned, including AI-aircraft software company Shield AI, the autonomous weapons firm Anduril, cruise missile startup CoAspire, and low-cost munitions maker Castelion. Some details of the meeting were previously reported by Breaking Defense.
In many ways, this is the moment Silicon Valley’s defense entrepreneurs have said they were made for — to be cheaper, quicker, and more nimble to the needs of the U.S. fighting force than legacy multibillion-dollar defense contractors.
They represent a sharp departure from established firms, which have far more experience managing clunky government acquisition processes and billions of dollars in capital to spend producing weapons en masse and lobbying lawmakers, but can move more slowly, especially in creating new supplies featuring cutting-edge technology, including artificial intelligence.
The urgent need for new weapons is a major test for the Trump administration, which has turbocharged its relationship with Silicon Valley and made collaboration with startups a core part of its weapons acquisition process. The conflict, according to industry experts, may reveal whether newcomers can deal with the challenging realities of providing weapons at scale, overcoming antiquated contracting processes and congressional gridlock.
Hegseth focused on these hurdles at the gathering, asking each executive what obstacles stood in the way of producing more weapons, according to the people. Several pointed to slow Pentagon contracting processes and the difficulty startups face securing enough up-front financing to fund large production runs and expensive research and development.
It’s unclear, however, whether the industry’s newest entrants can scale quickly enough to meet the Pentagon’s demands.
“It’s one thing to build … it’s another thing to then mass produce,” said Jerry McGinn, the director of the Center for the Industrial Base at the Center for Strategic and International Studies. “Can they deliver?”
Acting Pentagon press secretary Joel Valdez said in a statement to the Washington Post that the Defense Department is “transforming how the Department fights, buys, and builds” its weapons “to ensure we rapidly deliver critical technology to the warfighter at scale.” He added that the department “will harness the creativity and drive of American innovators, clear bureaucratic blockers, and put our acquisition system on a wartime footing to deliver tangible solutions to the Joint Force.”
Anduril and Shield AI did not reply to a request for comment.
‘Begging to be unleashed’
In the second Trump administration, the Pentagon has made it increasingly clear that Silicon Valley will be essential in creating cheaper, smarter, and smaller weapons to reshape how the U.S. fights war.
The Defense Department’s top leadership has become stuffed with former Silicon Valley executives, bringing their startup ethos to the Pentagon to transform the military.
Speaking in November at the National War College in Washington, Hegseth outlined his vision to overhaul the Pentagon’s acquisition process in partnership with U.S. industry to ensure it can operate on a wartime footing.
“American industry and its innovative spirit are begging to be unleashed to solve our most complex and dangerous warfighting problems,” he said. “We need to get out of our own way, out of your way and enter into real partnership with you rather than overprescribe and decelerate your natural progress.”
Approximately 10,000 new defense tech companies have entered the market since 2024, according to a July report by CSIS. Nontraditional companies outside of legacy defense contractors received more than $120 billion in contract obligations in the 2025 fiscal year.
But one of the Pentagon’s most urgent needs is munitions. The war with Iran has sharply depleted U.S. stockpiles, with CSIS estimating Monday that inventory of Patriot interceptors has fallen from 2,200 before the war to fewer than 827, and THAAD missiles from 452 to fewer than 278.
It could take three or more years to replenish the supply of THAAD and Patriot missile defense systems to what it was before the Iran war, according to a CSIS analysis in May, putting the U.S. at increased risk of service members dying and military assets abroad becoming damaged due to weakened defenses. Precision strike and joint air-to-surface missiles may take several months to a year to replace, according to the analysis.
The Defense Department is aiming to fill this gap by turning to tech companies that make low-cost munitions. The Pentagon’s fiscal 2027 budget calls for nearly half of all of its munitions to be low-cost, with that share rising to 70% by fiscal 2031, CSIS analyzed.
This mindset has filtered into current agreements. In May, the Pentagon announced several multiyear arrangements with defense tech companies, including Anduril, Castelion, CoAspire, Leidos, and Zone 5, to “aggressively expand” the U.S. military’s strike capabilities and purchase their low-cost missiles.
The goal, according to the announcement, is to procure 10,000 low-cost cruise missiles in three years, starting in 2027. The Defense Department has also said it will issue a contract to Castelion to purchase a minimum of 500 of its low-cost hypersonic missiles — called Blackbeard — annually with a desire to buy up to 12,000 over five years if the technology receives proper testing accreditations.
McGinn of CSIS said the demand will expose the industry to the realities of making weapons in real time. The startups have shown they can build the technology at low cost, he said, but now they have to prove their products are up to Pentagon standards, while navigating the whims of Congress, which appropriates defense spending.
Doug Denneny, the founder and chief executive of cruise missile startup CoAspire, said startups face a challenge beyond mastering technological advancements.
“That is the direct messaging that we receive from the Department of War,” he said, using the Trump administration’s preferred name for the Defense Department. “‘Great that you’ve got this great technology. … We get it. We believe it. You’ve demonstrated it. You’ve proven your capability. Now you have to manage your supply chain, and now you have to produce at scale. Otherwise, it’s not worth the investment.’”
“The importance of that has been emphasized to me personally by senior leadership in the Pentagon,” he added.
The rush to expand weapons production could also overwhelm the subcontractors that supply critical components, creating bottlenecks across the defense supply chain, Denneny said.
Bryon Hargis, co-founder and chief executive of Castelion, said the Pentagon’s reliance on startups carries enormous pressure. His company’s Blackbeard hypersonic missile could cost about $500,000 each — far below the roughly $5 million price tag of comparable weapons v but scaling production to meet military demand remains the challenge.
“I feel the weight of … everything that we still have yet to do and to build out,” he said, adding that making good on supply promises is “going to be just tremendous amounts of pain over the next years.”
He noted that the partnership is “an honor, but it’s a great responsibility. Like I feel we have to deliver.”
