Why Most National Security Startups Fail And How to Do Better

After scouting 200+ startups trying to break into defense tech, I’ve noticed a pattern: many of these companies keep falling into the same traps. The result? Frustrated founders, skeptical investors, and military customers left unimpressed. Whether you’re a startup founder, an investor eyeing the next defense unicorn, or a defense insider hoping to tap private-sector innovation, it’s crucial to understand these pitfalls. Here’s my take: casual, opinionated, and hard-earned, on why most defense startups fail and how they could do better.

Chasing SBIRs Without a Real Mission Fit

The Pitfall: Many startups treat SBIR (Small Business Innovation Research) contracts like golden tickets. They chase every SBIR grant in sight, lured by non-dilutive funding, but often without considering if there’s a real military mission needed for their tech. The result is a company that’s basically an “SBIR mill,” stringing together small government awards with no path to full-scale adoption. Sure, SBIRs can keep the lights on for a while, but Phase I and II contracts don’t guarantee any long-term deal or program of record. In fact, some firms have made an art of winning dozens of SBIRs without ever transitioning to a meaningful deployment (their core competency becomes proposal-writing, not problem-solving). This is white-card welfare at its finest, taxpayers funding perpetual R&D with little to show for it. If your startup is built solely on the promise of government contracts, watch out: the procurement process is slow and convoluted, and it can kill you before you ever see a production contract.

How to Do Better: Treat SBIRs as a means to an end, not the end itself. Before you even apply, ask: Does this topic align with a real mission priority? Do you have a service sponsor or end-user who actually cares about the outcome? Focus on solving a pain point that warfighters or program offices truly have, not just what sounds technically cool. The best defense startups use SBIR funding to drive toward a “Phase III,” a real procurement or to prove out tech that also has commercial legs. In other words, if you win a Phase II, be ready with a plan for what’s next (e.g. a pilot with a unit, a partnership with a prime contractor, or a follow-on sole-source contract). Don’t fall in love with the grant money and forget the mission; SBIRs should be catalysts for customer discovery and product refinement, not your long-term business model. In short, chase mission fit over easy money. A smaller contract that actually gets used by a platoon or an operator in the field beats a larger SBIR that ends up as a science project on a shelf.

Not Understanding the Department of War Procurement Path

The Pitfall: The Department of War buys things in ways that can baffle even seasoned entrepreneurs. I’ve seen startups assume that a successful demo or a single military champion means an immediate large contract, only to crash into the wall of bureaucracy. Defense acquisition is a maze of budget cycles, acronyms, and stakeholders. Unlike the commercial world, where you sell directly to a customer, in defense, you must navigate multiple entry points and approval layers. If you don’t understand the concept of a Program of Record, the “valley of death,” or why a Program Executive Office (PEO) might matter more than impressing a four-star general at a demo day, you’re in trouble. The truth is, getting a prototype funded is relatively easy; getting it fielded at scale is hard. There’s often a lengthy gap (it could be years) between proving your technology and seeing it procured in volume. This is the infamous Valley of Death, where startups run out of money waiting for the DoD to turn a successful pilot into a budget line item. Many founders also underestimate the “colors of money” (R&D funds vs. procurement funds) and how Congress and the Pentagon coordinate on funding. Simply put, if you don’t map out how and who will buy your product (and with what money), your brilliant tech might never leave the prototype stage.

How to Do Better: Do your homework on the military sales cycle. Start by identifying your real customer: is it an operational unit, a program office, a lab, or an initiative like AFWERX/DIU? Each has different timelines and criteria. Talk to people who have done it before; a retired program manager, an ex-defense contractor, or others in the H4D (Hacking for Defense) network. Build a roadmap from demo to deployment: for example, use an OT (Other Transaction) agreement for fast prototyping, but also line up a sponsor to insert your tech into next year’s budget (perhaps via the Program Objective Memorandum process). Engage early with stakeholders who control funding, even Congress if needed, to avoid nasty surprises in funding gaps. Also, be realistic about timelines: if you know defense deals take 12-24 months (or more), plan your runway accordingly (yes, that might mean raising more capital or generating revenue elsewhere in the interim). Finally, consider partnering with a larger defense prime or systems integrator as a channel; they can help you navigate contracting and integrate your solution into existing platforms. In sum, learn the system or find someone who does. The DoD acquisition maze is daunting, but it’s navigable with the right guides. Those who crack it will find that once you’re in, contracts can be lucrative and sticky (the flip side of slow sales is long-term customer loyalty).

Marketing to Warfighters Like You’re Selling SaaS

The Pitfall: Here’s a quick way to lose a room full of military folks: pitch your product like a typical Silicon Valley SaaS startup. I’ve seen founders go into meetings with warfighters or Pentagon brass and reel off buzzwords like “disruptive platform” and vanity metrics like monthly active users or commercial TAM (Total Addressable Market). News flash: warfighters aren’t impressed by your VC slide deck. They care about mission outcomes, reliability, and whether your tech will help them win. Startups that don’t tailor their messaging to the defense audience will come off as tone-deaf. Marketing to the Department of War isn’t like running a Facebook ad campaign; it requires speaking the language of mission needs. Common mistakes include using civilian business jargon, focusing on features rather than battlefield benefits, and assuming the same sales tactics will work. For example, a slogan like “Optimize your data pipeline with our AI SaaS” might receive polite nods, but it won’t resonate as effectively as “Detect threats faster to protect your troops.” I’ve also seen startups treat military end-users as an afterthought; they pitch high-level to Pentagon leadership but never bother to get feedback from the NCOs or soldiers who would actually use the tool. This can lead to flashy marketing (even some cool drone video or a slick demo) that wins innovation awards but fails to gain adoption in the field.

How to Do Better: Know your audience, and speak to what they value. In the defense world, that means leading with mission impact. Drop the generic “faster, better, cheaper” spiel and frame your value in terms of closing a capability gap or improving an operational outcome. If you’re selling to a combat unit, emphasize how your solution might, say, improve situational awareness, reduce load on the soldiers, or increase survivability. If you’re targeting a logistics or cyber team, talk about how you address their specific pain points in military operations (not just generic IT improvements). It can help to use language from the military’s own documents or concepts of operation, show you understand their world. Also, activate trusted voices: a quote or testimonial from a veteran or a respected defense insider can carry far more weight than your startup’s founder bragging about credentials. Remember that in defense, credibility is king. Aligning your marketing with mission needs and using mission-focused language builds trust with skeptical DoD customers. Concretely, this could mean creating a one-pager that highlights, in plain English (or even better, Pentagon-ese), how your tech supports, say, Joint All-Domain Command and Control or whatever strategic priority it ties into. Finally, get your product in front of real users early, join military tech exercises or pilot programs where warfighters can kick the tires. Their feedback (and eventual word-of-mouth) will not only improve your product but also give you authentic stories to tell in your marketing. In short: market by showing you understand the mission and the user, not by copying the latest SaaS growth hacking playbook.

Speaking Mission, Not Just Metrics (The Winners’ Playbook)

The Ones That Win: After all these critiques of what not to do, let’s talk about the startups that actually break through. The common thread among the winners is that they learn to speak about mission, not just metrics. They still track the usual business metrics, of course, but when it comes to interfacing with the defense ecosystem, they translate everything into mission impact. These founders and teams eat, sleep, and breathe the end-user’s needs. In fact, the best defense startups often have former military or defense folks on the team, or they’ve spent serious time with warfighters in the field. They can converse with a colonel or Navy captain and genuinely understand the problem that the officer needs solved, and articulate how to solve it in operational terms. As one industry veteran put it, “If we’re serious about building the future of defense, we need founders who know the mission, investors who understand the mission, and teams that build with the warfighter, not around them.” The successful companies showcase how their technology improves readiness, saves money or lives, or gives the U.S. an edge; not just how it uses cool tech like AI/ML or how fast their revenue is growing. DoD buyers ultimately care less about your input metrics (e.g. patents filed, dollars raised) and more about how you will help them achieve their mission safely and effectively.

How to Do Better: Embed the mission into your company’s DNA. This means two things: (1) Language and culture, and (2) Actions and metrics. For language, practice describing your product in terms of military outcomes at every opportunity. Train your sales and BD team to lead with mission value props (e.g. “This system will reduce convoy ambushes by 40% through earlier threat detection,” a quantifiable outcome tied to a mission) instead of generic tech superlatives. Internally, celebrate metrics that matter for defense: number of successful field trials, mission scenarios supported, reliability under test conditions, etc., not just your quarterly ARR. Externally, if you brief investors or media, highlight that you have traction with the military itself (e.g. a pilot with a Special Operations unit, or endorsement from a Program Manager). This signals that you speak the DoD’s language and can navigate their world, something national security-minded investors are actively looking for. In terms of actions: go out and get real user feedback from the military community as early as possible. If you’re building drone tech, spend time with infantry or special ops units during exercises; if it’s cybersecurity, talk to DoD cyber analysts, etc. Iterate your product based on that feedback, even if it deviates from what your tech-first instincts said. Showing that you’ve incorporated warfighter input not only makes your solution better, it proves you’re mission-driven and not just tech-driven. Finally, maintain dual-use viability if possible (i.e. solve a commercial problem alongside the military one), but don’t let the pursuit of commercial scale come at the expense of your military customer’s trust. The defense market isn’t smaller than the commercial market, it’s just different; and those who truly embrace its differences are the ones who win.

Conclusion: The Defense Market Isn’t Smaller, Just Different

Breaking into defense as a startup is hard, but it’s not impossible. The defense market often gets a bad rap for being “small” or slow, but in reality it’s huge (hundreds of billions in spending), it just plays by different rules. The startups that fail tend to act like these rules don’t apply to them. The ones that succeed respect the differences and turn them into advantages. If you’re a founder, take these lessons to heart: focus on mission-driven development, educate yourself on procurement, and treat the warfighter as your ultimate customer. If you’re an investor, look for teams that demonstrate this kind of alignment (red flag the ones boasting only vanity metrics or endless SBIRs with no transition). National security leaders today are looking for private-sector partners who get it, who can deliver innovative tech and navigate the Department’s realities. And if you’re a defense insider, be willing to guide and even mentor these startups; help them understand your needs and processes (it’s in everyone’s interest that the best tech makes it to the field).

In the end, a defense startup’s journey is not about shrinking ambitions; it’s about adapting to a different landscape. Those who learn to speak the language of defense, align with the mission, and persevere through the maze will find that this market can be incredibly rewarding. The stakes are higher than selling ad tech or food delivery apps, in this arena, success is measured in strategic advantage and lives saved. So let’s do better on all sides: build with purpose, invest with insight, and innovate in service of the mission. The defense market isn’t smaller, it’s just different; and if you can master the difference, you won’t just win contracts, you’ll help shape the future of national security.

(Remember: These insights are drawn from real patterns I’ve observed scouting 200+ companies; consider them food for thought as you plot your next move in the defense space. Good luck, and get after it!)