Y Combinator, the start-up incubator famous for nurturing some of Silicon Valley’s biggest successes like Airbnb, Reddit and DoorDash, has ventured into uncharted territory by backing its first weapons manufacturer, Ares Industries.
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Ares Industries, a defense technology start-up officially launched with the goal of revolutionizing the missile industry by producing smaller, cost-effective anti-ship cruise missiles.
The company’s focus is on developing missiles that are ten times smaller and cheaper than existing models specifically targeting the need for scalable weaponry in conflicts such as those that could occur between the US and China over the Taiwan Strait.
Ares has already developed multiple prototypes and conducted successful flight tests in California’s Mojave Desert during the summer. The founders Devan Plantamura and Alex Tseng anticipate delivering functional missile systems to customers by mid-2025.
Y Combinator has shied away from defense-related investments focusing more on software, e-commerce and fintech.
The current missile production market is dominated by a few large companies like Lockheed Martin and Raytheon, which have become bloated and unable to meet growing demand efficiently.
The rise of drone ships has created a need for smaller, more agile missiles, similar to how reusable launch vehicles revolutionized the space industry, a field where SpaceX now dominates after breaking the Lockheed-Boeing duopoly.
Traditional US missiles, which cost millions and weigh thousands of pounds are deemed excessive for modern warfare needs.
The US defense sector faces challenges in missile production capacity. In a conflict, stockpiles of existing missiles could be depleted within weeks.
Ares’ smaller, cheaper missiles could fill this gap allowing for production and deployment at a fraction of the cost.
The new generation of missiles from Ares would be effective against smaller Chinese warships and swarms of unmanned surface vessels which are being deployed by China’s navy.
Before SpaceX companies like Lockheed Martin and Boeing had a stronghold on space launch vehicles. SpaceX’s innovation in reusable rockets lowered costs and made space more accessible similar to what Ares aims to achieve with missile technology.
Just as SpaceX became a leading force in space exploration, Ares has the potential to disrupt the defense industry by making advanced missile technology more accessible.
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Over the past few years there has been a shift in Silicon Valley’s attitude towards defense investments.
Russia’s invasion of Ukraine in 2022 and conflicts in the Middle East have highlighted the importance of advanced military technology leading to increased interest from venture capitalists.
Between 2021 and 2023, defense tech companies attracted $108 billion in investments.
Companies like Palantir and Anduril have gained prominence with Anduril raising $1.5 billion to accelerate autonomous weapons production.
The company was founded in May 2024 by Devan Plantamura and Alex Tseng, Ares Industries is making waves. Both founders bring a wealth of experience from their previous work in other defense startups.
They share a vision of building a new class of anti-ship cruise missiles that are smaller and cheaper than current offerings.
In a post on Y Combinator’s website, Plantamura and Tseng outlined their goals to produce missiles that are 10 times smaller and 10 times cheaper than those currently available, while still delivering the capabilities that the Department of Defense requires.
They have already tested prototypes in the Mojave Desert and plan to deliver working missile systems to their first customers by mid-2025.
Earlier in 2024 Y Combinator began actively seeking applications from startups focused on defense technology recognizing the growing importance of innovation in this sector.
Y Combinator partner Jared Friedman has been vocal about the necessity of such innovations in light of global security concerns.
When SpaceX entered the space industry in 2002, it faced a market dominated by a duopoly much like the current situation in the missile industry.
Lockheed Martin and Raytheon have long been the primary suppliers of cruise missiles benefiting from years of cost-plus and no-bid contracts that have led to bloated costs.
The taboo against investing in defense technology has weakened. Venture capital firms like Andreessen Horowitz, General Catalyst and Sequoia Capital have all made their first step into the sector.
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