The Defense Innovation Unit (DIU), founded in 2015, is the Department of Defense’s bridge to the commercial tech sector, accelerating the adoption of commercial and dual-use technologies across the U.S. military. Headquartered in Silicon Valley with offices nationwide, DIU focuses on areas such as AI, autonomy, cyber, telecommunications, energy, human systems, and space. Using flexible contracting tools like Other Transaction Authorities and Commercial Solutions Openings, it prototypes and scales technologies in months instead of years.
Since inception, DIU has facilitated over $4.9 billion in production contracts across 48 companies backed by $20 billion in private investment, expanding access for venture-backed and nontraditional defense firms. Working across all service branches, it identifies operational challenges solvable through commercial innovation and transitions proven solutions into military use. As the Pentagon’s leading innovation engine, DIU exemplifies how government and industry collaboration sustains America’s technological advantage and highlights the growing convergence between venture capital and defense.
In this article, we will outline key lessons for GPs and LPs as well as explore why Silicon Valley has emerged as a critical hub for military innovation.
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1. Anduril Industries
Overview: Anduril Industries is a defense technology company developing advanced autonomous systems and software-defined defense platforms for the United States and allied militaries. Founded by technology entrepreneurs and staffed by a mix of Silicon Valley engineers and military veterans, the company blends commercial agility with deep operational expertise. Its mission is to accelerate the deployment of modern, software-driven capabilities that bolster national security, enhance situational awareness, and bolster deterrence.
Focus: Under a 2021 Defense Innovation Unit (DIU) contract within the Autonomy Portfolio, Anduril developed and deployed its counter-unmanned aerial system (CUAS) technology to defend military installations from adversarial small drones. The system integrates the company’s Lattice OS, an autonomous command-and-control platform that fuses sensor, drone, and vehicle data into a unified operational picture, with artificial intelligence and commercial-off-the-shelf hardware to detect, track, and defeat hostile aerial systems. Lattice supports multiple domains including base defense, maritime autonomy, and ISR, reducing manpower requirements and enabling rapid, automated response. Privately funded and vertically integrated, Anduril delivers deployable solutions in months rather than years, supplying critical systems to the U.S. Department of Defense, the Department of Homeland Security, and allied defense partners.
2. Shield AI
Overview: Shield AI is a defense technology company pioneering artificial intelligence and autonomous systems to protect service members and civilians. Founded in 2015 by former Navy SEAL Brandon Tseng, along with Ryan Tseng and Andrew Reiter, the company develops AI pilots that enable aircraft and other military platforms to operate independently of GPS, communications, or remote control. Headquartered in San Diego, Shield AI’s mission is to make autonomy a core capability across all domains, air, land, sea, and space, redefining the future of defense through intelligent, resilient systems that adapt and learn in real time.
Focus: Under a 2020 Defense Innovation Unit (DIU) contract within the Autonomy Portfolio, Shield AI developed an AI-enabled quadcopter system designed for autonomous indoor reconnaissance and urban combat. The system allows warfighters to conduct intelligence gathering in complex environments, such as buildings, caves, and multi-level structures, without exposing troops to risk. Shield AI’s software enables drones to navigate unknown spaces, avoid obstacles, and generate real-time 3D maps with sub-second latency. This technology represents an early application of the company’s Hivemind AI pilot, a scalable autonomy framework now deployed across multiple aerial platforms including the V-BAT aircraft. Together, these advancements exemplify Shield AI’s vision of deploying AI pilots on every military asset by 2030, enhancing mission effectiveness and force protection.
3. Applied Intuition
Overview: Applied Intuition builds advanced software infrastructure for the development, testing, and deployment of autonomous systems across both commercial and defense sectors. Founded in 2017 and headquartered in Mountain View, California, the company provides an integrated simulation and validation platform that accelerates autonomy development and improves mission readiness. Its tools enable engineers to safely design, evaluate, and scale AI-powered systems across complex environments. Applied Intuition’s clients include leading automakers such as Toyota, Volkswagen, and Porsche, as well as U.S. defense organizations like the Army and the Defense Innovation Unit (DIU).
Focus: Under a 2024 DIU contract within the Autonomy Portfolio, Applied Intuition delivered its Autonomous Development Platform (ADP) to support the U.S. Army’s Robotic Combat Vehicle (RCV) program. The platform provides a comprehensive modeling, simulation, and validation environment to test and refine autonomy software stacks for uncrewed ground vehicles. ADP enables rapid iteration and continuous deployment of autonomous features through high-fidelity, parameterized scenarios that replicate diverse operational design domains (ODDs). The company’s broader defense suite, centered on its Axion and Acuity platforms, extends across land, air, sea, and space, supporting real-time onboard autonomy, collaborative operations, and system scalability. Through this partnership, Applied Intuition is helping the Pentagon modernize and operationalize autonomy at scale across the joint force.
4. C3.ai
Overview: C3.ai develops enterprise artificial intelligence software that enables predictive analytics, operational optimization, and autonomous decision-making across large-scale data environments. Its solutions are deployed by defense and commercial organizations to improve mission readiness, increase system uptime, and reduce maintenance costs through AI-driven insights. C3.ai’s technology integrates securely with existing DoD data infrastructures to support real-time monitoring and fleet management at scale.
Focus: Under a 2019 Defense Innovation Unit (DIU) contract within the AI/ML Portfolio, C3.ai partnered with the U.S. Air Force and Army to deploy a predictive maintenance platform for aircraft fleets. The AI system analyzes operational and maintenance data to forecast component failures, prioritize repairs, and automate inventory management. The Air Force reported a 40 percent reduction in unscheduled maintenance for critical subsystems, while the Army saw a 24 percent decline in severe in-flight malfunctions. The program has since expanded to include additional platforms such as the HH-60 Pave Hawk and F-35 Lightning II. DIU and C3.ai continue to extend predictive maintenance across multiple Services, including prototype efforts with the Marine Corps for ground vehicles, enhancing readiness, safety, and lifecycle efficiency across the force.
5. Planet Labs
Overview: Planet Labs operates the world’s largest fleet of Earth observation satellites, providing daily, high-resolution imagery to governments, defense agencies, and commercial clients. Its continuous monitoring capability delivers unparalleled situational awareness across domains, supporting applications from intelligence and reconnaissance to disaster response and environmental management. Planet’s persistent imaging and data infrastructure enable real-time decision-making for national security and strategic planning, empowering users to detect changes and act with precision across the globe.
Focus: Under a 2019 Defense Innovation Unit (DIU) contract within the Space Portfolio, Planet Labs supported the Department of Defense’s Peacetime Indications and Warning mission through high-frequency, unclassified imagery collection. The company’s constellation delivers large-area, 3–5 meter resolution coverage for daily monitoring, filling critical gaps in traditional space-based reconnaissance. In partnership with the National Reconnaissance Office (NRO) and National Geospatial-Intelligence Agency (NGA), Planet provides scalable access to unclassified imagery over key regions of interest, enhancing mission continuity, operational awareness, and the DoD’s ability to detect emerging threats. This collaboration reinforces the government’s strategy to leverage commercial GEOINT solutions for continuous, cost-effective, and resilient space-based observation.
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6. Capella Space
Overview: Capella Space provides high-resolution, synthetic aperture radar (SAR) imaging satellites that deliver persistent, all-weather, day-and-night Earth observation for defense, intelligence, and commercial customers. Its constellation enables rapid revisit rates and reliable coverage regardless of cloud or light conditions, filling critical gaps in space-based reconnaissance. Capella partners with the U.S. Department of Defense, the National Reconnaissance Office, and allied agencies to enhance situational awareness, early warning, and mission planning in contested and denied environments.
Focus: Through a 2022 Defense Innovation Unit (DIU) contract under the Space Portfolio, Capella demonstrated commercial SAR micro-satellites that expand the DoD’s access to cost-effective, scalable imaging capabilities. The system supports large-scale situational awareness by allowing commanders to flex and adapt to emerging threats with timely, reliable data. Each satellite’s small size and modular design enable flexible deployment and replacement, while data from the payload is delivered in formats optimized for cloud-based computing, machine learning, and object detection analysis. By leveraging commercial innovation for peacetime and operational use, Capella helps the Joint Force enhance reconnaissance resilience and responsiveness across dynamic global environments.
7. Altana AI
Overview: Altana builds the network for trusted trade, connecting businesses and governments through an AI-powered platform that maps and analyzes the global supply chain. Its system creates a dynamic, federated model of world commerce, allowing users to trace the origin, movement, and compliance of goods across multi-tier networks. By illuminating complex trade relationships and risks, Altana helps organizations manage supply chain security, ensure regulatory compliance, and enhance economic resilience. The company partners with entities including U.S. Customs and Border Protection, the Department of Homeland Security, NATO, and the Department of Defense to modernize enforcement, enhance transparency, and safeguard global commerce.
Focus: Altana’s Atlas platform applies advanced artificial intelligence and machine learning to vast volumes of commercial and public data, producing a continuously updated, searchable map of the global supply chain. Its technology enables users to identify and mitigate risks in real time, ranging from forced labor exposure and tariff violations to foreign-controlled suppliers and vulnerabilities in critical technology networks. Under a 2024 contract with the Defense Innovation Unit (DIU), Altana’s AI/ML solution supports the U.S. defense industrial base by identifying, tracking, and countering threats to critical assets, particularly hardware and software linked to foreign ownership or control. By combining open-source intelligence, proprietary analytics, and cross-border collaboration tools, Altana delivers a unified data infrastructure that helps both governments and enterprises act with speed, confidence, and trust.
8. Saildrone
Overview: Saildrone Inc., headquartered in Alameda, California, develops and operates autonomous uncrewed surface vehicles (USVs) that collect oceanic and maritime-domain intelligence. Founded in 2012, the company has evolved from conducting scientific and climate research missions to serving both commercial and defense applications. Saildrone’s technology provides persistent maritime awareness and data collection in areas that are costly or dangerous for manned vessels to access, furthering U.S. and allied capabilities in surveillance, mapping, and ocean monitoring.
Focus: Under a 2022 Defense Innovation Unit (DIU) contract within the Autonomy Portfolio, Saildrone demonstrated high-endurance, wind- and solar-powered USVs capable of delivering real-time, operationally relevant maritime intelligence, surveillance, and reconnaissance (ISR). The platform enables continuous monitoring of maritime transit zones and supports missions such as oceanographic data collection, coastal mapping, station keeping, and thermal or salinity boundary tracking. By providing long-duration, unmanned coverage with minimal fuel requirements, Saildrone enhances the DoD’s ability to maintain situational awareness across vast maritime environments while reducing operational costs and environmental impact.
9. SpyCloud
Overview: SpyCloud, founded in 2016 and headquartered in Austin, Texas, is a cybersecurity company specializing in identity-threat protection and cyber risk intelligence. The firm leverages breach and malware data to detect compromised credentials, prevent account takeovers, and mitigate ransomware and fraud exposure across enterprise and government systems. SpyCloud’s technology provides high-fidelity insight into threat actor behavior by correlating public, private, and dark web telemetry, helping organizations preemptively address vulnerabilities before exploitation.
Focus: Under a 2023 Defense Innovation Unit (DIU) contract within the Cyber Portfolio, SpyCloud demonstrated integration of its threat intelligence platform into U.S. government and military cyber operations. By enriching cyber defense ecosystems with non-traditional data sources, SpyCloud’s platform enables continuous situational awareness of malicious activity, allowing the DoD to contextualize threats and prioritize responses more efficiently. The lightweight, scalable software extends visibility into compromised identities and critical infrastructure exposures, helping defense and civilian agencies automate remediation and enhance resilience across interconnected digital networks.
10. Rhombus Power
Overview: Rhombus Power Inc., based in Palo Alto, California, is a software and artificial intelligence company that develops decision-intelligence platforms for defense and national security organizations. The firm’s solutions combine predictive analytics, machine learning, and expert-guided reasoning to support complex decision-making across strategic, operational, and tactical domains. Rhombus Power’s technology is designed to transform massive, multi-domain datasets, ranging from intelligence feeds to operational logistics, into timely, actionable insights for mission planners and senior leaders.
Focus: Under a 2020 Defense Innovation Unit (DIU) contract within the AI/ML Portfolio, Rhombus Power’s data science and machine learning platform was deployed to enhance enterprise-level decision-making across several Department of Defense agencies and commands. The system optimized the Planning, Programming, Budgeting, and Execution (PPBE) cycle by automating the synthesis and analysis of large datasets, expanding the range of viable planning choices for senior military leaders. The platform increased the number of actionable options threefold and reduced the time required to generate recommendations from three weeks to a single day, enabling faster, more data-driven force design and strategic planning decisions across the Department.
Many DIU-backed companies featured here can be analyzed further in Dakota Marketplace alongside related funds and investors.
Strategic Takeaways for GPs and LPs
1. Dual-Use is Becoming Mainstream.
The line between commercial and defense technology has effectively dissolved. Companies like Anduril, Shield AI, and Applied Intuition exemplify how venture-backed firms can successfully bridge both markets by adapting proven commercial models for national security use. For GPs, this signals a durable investment theme: dual-use companies have multiple exit pathways and can thrive under both commercial demand cycles and long-term government contracts.
2. The Government is Now a Venture-Ready Customer.
Through DIU’s contracting mechanisms, especially Other Transaction Authorities (OTAs), the Department of Defense is moving faster and de-risking early-stage partnerships. What once required years of procurement red tape can now be achieved in months. LPs should recognize that government-backed validation not only accelerates revenue but also bolsters defensibility for portfolio companies working in critical technologies like autonomy, cybersecurity, and AI infrastructure.
3. Silicon Valley is the New Arsenal.
DIU’s success highlights a geographic and cultural realignment: defense innovation is now centered in commercial technology hubs. The talent, capital, and speed of Silicon Valley startups are reshaping defense supply chains, creating scalable platforms that rival legacy primes in capability and responsiveness. GPs investing in frontier tech, AI, sensors, robotics, energy systems, are increasingly backing the firms shaping the future battlefield and redefining national resilience.
4. AI is the Core Enabler Across Portfolios.
From predictive maintenance (C3.ai) and decision intelligence (Rhombus Power) to trusted trade (Altana) and autonomous vehicles (Applied Intuition), artificial intelligence underpins nearly every DIU success story. The takeaway for investors is clear: data-driven autonomy is not a sector, it’s an operating principle transforming every defense and industrial vertical. LPs looking for durable exposure to AI should consider funds with active dual-use theses and relationships within the defense ecosystem.
5. Early Partnerships Create Strategic Moats.
Companies working with DIU often gain first-mover advantages that are difficult for competitors to replicate. These relationships open follow-on production contracts, credibility with multiple agencies, and cross-service opportunities. For GPs, supporting founders who understand government alignment, compliance, and mission context can translate into compounded long-term value and national-scale impact.
Conclusion
The Defense Innovation Unit’s evolution over the past decade underscores a fundamental truth: defense innovation is no longer the exclusive domain of primes or contractors, it’s a venture frontier. The top DIU portfolio companies illustrate how commercial ingenuity, venture capital, and national security imperatives are converging into a powerful ecosystem. For investors, this represents not only a chance to back transformative technologies but also to shape how the United States, and its allies, compete and secure advantage in the 21st century.
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