I work in the defense industry as an engineer, for one of the larger defense companies, a few thoughts on this: - The defense industry is ripe for disruption,

I work in the defense industry as an engineer, for one of the larger defense companies, a few thoughts on this: - The defense industry is ripe for disruption, defense contractors are very top-heavy, siloed, and bureaucratic, and incredibly inefficient. However, there are structural issues to getting new companies started, and I don’t see anything in Ares that inspires confidence that they will succeed. - Cash flow is a big problem for small government contractors. Although there are funding initiatives, such as SBIR, to encourage small entrepreneurship in government contracting, it’s generally difficult to transition out of that because the government can take an inordinate amount of time to provide the funds that they promise to a contractor. You can, of-course, get a loan from a third party to fill your funding gap, but that will eat into your profit margin. Size is a form of protection here because other contracts and programs can buffer against cash flow problems in one program. - funding mechanisms, and laws surrounding them, the FAR in particular, incentivizes against non-traditional corporate organizing and being effective in execution. If you’ve made the transition to being a more established company, you’re getting bigger contracts, you will be following Earned Value (EV). This is required for contracts of a certain, agency defined, size. EV more-or-less requires you to follow waterfall development. It means you effectively cannot do agile development, although you can find examples of contractors using SAFe and other forms of Dark Agile, these are merely waterfall down poorly with extra steps. EV is a large bureaucratic undertaking, requiring certified earned value management systems and dedicated professionals, such as CAMs, planners, quality engineering, and contracts managers. This in service of being accountable, and making sure tax payer dollars are spent wisely, but it takes money to do this. You can’t capitalize on the benefits of being flexible and innovating with government funds because you need to report metrics as if you’ve laid out your entire plan at the start of the project. - Defense startups effectively have one customer, the US Federal Government. Although it is true that foreign military sales (FMS) happen for a variety of defense articles, all of these sales need to be approved by the US State Department, meaning you are entirely dependent on the executive branch to give you business. How many investors would like to invest in a product that is limited by one party in determining how much you will grow?