Aerospace & Defense CVCs: How Lockheed Martin, RTX, and Northrop Grumman Ventures Are Reshaping Innovation
- Elpis VC
- Sep 16
- 8 min read
Updated: Oct 20
Will corporate venture capital change the future of defense innovation?
The numbers speak volumes — global VC funding in defense startups hit approximately $31 billion in 2024, driven by rising security concerns and rapid technological evolution. This surge makes perfect sense when you consider venture capital's deep roots in American innovation, stretching back to World War II when aerospace and defense technology dominated early venture capital activity.
The momentum is remarkable! Just the first quarter of 2024 saw 103 aerospace startups secure $6.5 billion in investments. International conflicts and emerging global powers are fueling a renaissance of private investment in America's national security sector. Add the proposed record $1 trillion Department of Defense budget, and you have a powerful catalyst driving increased investments in national security startups.
AI adoption in aerospace and defense tells an equally compelling story — projected to grow from approximately $28 billion today to $65 billion by 2034. Major defense contractors like Lockheed Martin, RTX (formerly Raytheon Technologies), and Northrop Grumman recognized this opportunity and established robust venture capital arms to capitalize on the innovation wave.
📌 These corporate venture capital entities are strategically reshaping the defense innovation ecosystem by providing not just funding, but also invaluable industry access, technical expertise, and pathways to government contracts.
We'll explore how these aerospace defense CVCs are changing the innovation landscape through their strategic investments, focus areas, and unique approaches to supporting startups in this critical sector. The results might surprise you!
The Rise of Corporate Venture Capital in Aerospace
Corporate Venture Capital has become a powerhouse in aerospace — U.S. venture capital funds injected over $100 billion into defense-tech companies in just the last three years. We're witnessing a fundamental shift in how innovation gets funded in the aerospace sector.
Why CVCs are gaining ground over traditional VCs
Here's what makes corporate venture arms different from traditional VCs: Unlike institutional venture capitalists, corporate venture arms like Lockheed Martin Ventures, RTX Ventures, and Northrop Grumman Ventures offer unique advantages that extend far beyond financial backing. These CVCs provide deep industry connections and technical expertise that pure financial investors simply cannot match. They align investment strategies with their parent companies' objectives, creating direct pathways for startups to access massive government contracts.
The appeal is clear — Lockheed Martin Ventures doubled its fund commitment from $200 million to $400 million in 2022, reflecting strong conviction that the most dynamic defense innovations will come from startups.
How defense innovation is driving investment in aerospace startups
The Department of Defense's proposed $850 billion budget for 2025 includes significant allocation for research and development, creating fertile ground for aerospace innovation. To capitalize on this opportunity, the DoD launched multiple innovation-focused organizations over the past decade, including:
The Defense Innovation Unit (DIU)
The Office of Strategic Capital (OSC)
National Security Innovation Capital (NSIC)
AFWERX, NAVALX, and Army Applications Lab
These initiatives bridge the gap between how the DoD traditionally operates and how startups prefer to work, fostering a more collaborative innovation ecosystem.
The role of dual-use technologies in attracting capital
Dual-use technologies — innovations applicable to both military and civilian sectors — have become particularly attractive to investors. Think about it: many technologies we use daily originated as defense projects, including the internet, GPS, and Siri.
This versatility creates compelling investment opportunities. Companies developing dual-use applications benefit from diverse revenue streams, greater resilience to market fluctuations, and the ability to shift emphasis as commercial demand evolves. Startups with dual-use capabilities can reduce dependency on government contracts while opening opportunities for commercial scaling.
The economic impact? Defense innovation initiatives generate spillover effects that benefit the broader economy through job creation, knowledge sharing, and technological advancement. Pretty impressive for a sector that's often seen as purely military-focused.
Lockheed Martin Ventures: Strategic Capital for National Security
Established in 2007, Lockheed Martin Ventures has become a cornerstone in the defense CVC landscape. Here's what catches attention — they doubled their $400 million evergreen fund from $200 million in 2022, recognizing that startups are increasingly capturing the lion's share of technology funding.
Focus areas and investment thesis
Lockheed Martin Ventures targets early-to-late stage companies across 14 key focus areas that strengthen the defense industrial base. Their investment strategy centers on cutting-edge innovations in:
Next-generation electronics and quantum computing
Cybersecurity and artificial intelligence/machine learning
Advanced manufacturing and propulsion technologies
Space services and autonomy
Advanced communications and edge computing
They typically invest $1-5 million per round in companies whose technologies align with core business objectives or open new strategic markets. This focused approach allows them to screen over 1,000 startups annually, identifying those with potential to address evolving global threats.
Notable Lockheed Martin Ventures investments
Their current portfolio spans over 120 companies worldwide. Space-sector investments feature prominently — Rocket Lab, ABL, Terran Orbital, HawkEye 360,
Orbit Fab, and Helicity Space. Additional portfolio companies include:
Hidden Level (low-altitude airspace monitoring)
Fiddler (artificial intelligence)
CalypsoAI (machine learning security)
Red 6 (synthetic training)
Electra (hybrid-electric aircraft)
How startups benefit from Lockheed's ecosystem
Portfolio companies gain unprecedented access to Lockheed Martin's extensive resources. Entrepreneurs connect with world-class engineering talent and state-of-the-art technologies. Startups also receive entrée to Lockheed's international business relationships and supply chain.
The annual Demo Day exemplifies this ecosystem advantage — portfolio companies showcase innovations directly to Lockheed Martin and government representatives. This collaborative environment helps startups identify integration opportunities, navigate the defense sector, and potentially secure government support.
Chris Moran, Vice President of Lockheed Martin Ventures, captures their philosophy perfectly: "This commitment allows Lockheed Martin Ventures to identify, evolve and integrate emerging technology into our national security industrial base on a larger scale".
The results speak for themselves — Lockheed has created more than just a funding mechanism. They've built a strategic bridge between innovative startups and national security needs.
RTX Ventures: Building the Future of Aerospace Innovation
Lucky us — RTX Ventures launched in 2022 with a crystal-clear mission: investing in early-stage companies that will reshape aerospace and defense. This corporate venture arm of RTX Corporation brings something extraordinary to startups — not just capital, but direct connections to RTX's extensive resources and deep industry expertise.
Overview of RTX Ventures portfolio
Here's what makes them selective: the firm evaluates approximately 1,000 companies annually, investing in roughly 1% while maintaining a focused portfolio of around 21 companies. Their investment choices span fascinating innovations:
📌 Hermeus Corporation (hypersonic aircraft development)
📌 EpiSci (defense automation and AI)
📌 VerdeGo Aero (hybrid-electric propulsion)
📌 H55 (electric propulsion solutions)
RTX Ventures positions itself as both financial and strategic investor — for every dollar they invest, approximately $16 comes from other investors. Smart leverage!
Key sectors: AI, propulsion, and sustainability
RTX Ventures concentrates on four strategic areas: secure and connected ecosystems, autonomy and artificial intelligence, power and propulsion systems, and precision sensing. Their sustainability focus deserves special attention — they backed H55, which developed propulsion systems for Solar Impulse, the first solar-powered aircraft to circumnavigate the globe.
How RTX supports early-stage aerospace startups
Portfolio companies receive far more than funding. They gain direct access to RTX engineers, industry experts, and collaborative opportunities that can accelerate their growth. The speed is impressive — moving from introduction to investment in as little as three weeks.
This approach helps startups navigate the notoriously complex aerospace landscape while pushing innovation forward across the entire sector. What are your thoughts on this model?
Northrop Grumman Ventures: Deep Tech Meets Defense Strategy
Northrop Grumman's approach to venture capital reflects a clear philosophy: "operational freedom, creativity, ingenuity, low costs and rapid response". This mindset has positioned them as strategic players in the defense venture capital ecosystem.
Investment focus and portfolio highlights
Currently, Northrop Grumman has made 7 investments across NewSpace, Embedded Systems, and Drones sectors. Their portfolio demonstrates strategic vision through notable investments in Daylight Solutions, Echodyne, and Deepwave Digital.
Most recently? A significant $50 million investment in Firefly Aerospace's Series D round (May 2025) to support production of their jointly developed "Eclipse" rocket, set to launch as early as 2026.
Building partnerships beyond traditional investment
Northrop Grumman's collaboration strategy extends well beyond writing checks. Their Blue Labs innovation ecosystem actively seeks partnerships with technology startups developing quantum computing and AI solutions. Through their 11-week Technology Accelerator program, eight selected startups receive comprehensive mentorship, education, and business development guidance.
The cybersecurity partnerships are equally impressive — Northrop partners with over 100 universities globally to advance research and innovation, while simultaneously developing the Space End Crypto Unit prototype with Aeronix to protect satellite networks from cyber threats.
The strategy behind emerging tech bets
Alexander Altomare, entrepreneur in residence at Northrop Grumman, explains their strategy: "efficiently recognizing new, game-changing disruptive technologies outside our company, and then being the first to adopt and integrate them".
This forward-thinking approach drives their investment decisions. Their partnership with Firefly Aerospace for Eclipse exemplifies this strategy — designed to support space station resupply, commercial spacecraft, and critical national security missions. Through these strategic investments, Northrop Grumman maintains its competitive edge in the evolving defense landscape.
Conclusion
Aerospace and defense CVCs have emerged as game-changers in national security technology development! Lockheed Martin Ventures, RTX Ventures, and Northrop Grumman Ventures represent far more than financial backers — they function as strategic partners bridging the gap between agile startups and established defense contractors.
The surge in funding we explored — reaching $31 billion globally in 2024 — signals a fundamental shift in how defense innovation occurs. These corporate venture arms deliver unique competitive advantages through their industry connections, technical expertise, and pathways to government contracts that traditional VCs simply cannot match.
A powerful ecosystem is forming where startups gain more than capital. They receive access to world-class engineering talent, established supply chains, and opportunities to scale through government contracts. Meanwhile, parent companies like Lockheed Martin, RTX, and Northrop Grumman secure early access to technologies that enhance their competitive positions.
❗ Dual-use technologies remain particularly attractive investment targets, creating resilient business models that serve both defense and commercial markets. This approach builds stronger startups while accelerating innovation that benefits national security and the broader economy.
The future looks increasingly collaborative. Defense CVCs will likely continue expanding their portfolios as global security concerns drive demand for advanced technologies. Startups entering this space should consider corporate venture capital not just as funding sources but as strategic partners offering invaluable domain expertise and market access.
This renaissance in defense investment ultimately strengthens America's national security industrial base while accelerating technological advancement across multiple sectors. The strategic partnership between defense giants and innovative startups through corporate venture capital creates a powerful engine for addressing tomorrow's most critical challenges.
Here's to the continued evolution of defense innovation!
Whether you're a corporation looking to identify emerging technologies or a startup seeking strategic partnerships to accelerate growth, Elpis Labs connects innovators with the right opportunities — reach out to explore how we can drive your next breakthrough.
FAQs
Q1. What is driving the surge in aerospace and defense corporate venture capital?
The surge is driven by rising global security concerns, technological advancements, and increased defense budgets. Corporate venture arms are investing heavily in startups developing innovative technologies for both military and civilian applications.
Q2. How do aerospace defense CVCs differ from traditional venture capital firms?
Aerospace defense CVCs offer more than just funding. They provide startups with industry connections, technical expertise, and potential pathways to government contracts, leveraging their parent companies' resources and knowledge.
Q3. What are some key focus areas for aerospace and defense CVC investments?
Key focus areas include artificial intelligence, cybersecurity, advanced propulsion systems, space technologies, quantum computing, and sustainable aviation solutions. These areas align with evolving global threats and technological advancements.
Q4. How do startups benefit from partnering with aerospace defense CVCs?
Startups gain access to world-class engineering talent, established supply chains, and opportunities to scale through government contracts. They also receive mentorship, industry expertise, and potential collaborative opportunities with major defense contractors.
Q5. What role do dual-use technologies play in aerospace and defense investments?
Dual-use technologies, applicable to both military and civilian sectors, are highly attractive to investors. They offer diverse revenue streams, greater market resilience, and the potential for commercial scaling, making them a strategic focus for many aerospace and defense CVCs.