Y Combinator—the start-up incubator that helped launch DoorDash, Airbnb, Reddit, and Instacart—is supporting a weapons manufacturer for the first time, believing it has the potential to disrupt the defense industry with affordable, anti-ship missiles.
Ares Industries was unveiled on Tuesday with a promise to develop missiles capable of targeting ships hundreds of miles away, but ten times smaller and cheaper than current options.
“A conflict with China in the Taiwan Strait would be unlike anything we’ve seen in Ukraine or the Middle East,” wrote founders Devan Plantamura and Alex Tseng in a post. “Both the DoD and military experts agree that long-range anti-ship weapons or cruise missiles would be crucial in such a scenario.”
They cautioned that in the event of a war, the current stockpile of U.S. missiles would quickly run out, and there isn’t enough capacity to produce them quickly enough.
Plantamura and Tseng pointed out that $3 million, 3,000-pound missiles are unnecessary to take out smaller Chinese warships, especially with the presence of $200,000 unmanned surface vessels.
“The DoD is in need of smaller, more affordable cruise missiles in large quantities, but so far no one has delivered on that need,” they said.
Ares has developed multiple prototypes and conducted flight tests over the summer in California’s Mojave Desert. The founders anticipate delivering “early working missile systems” to their initial customers by mid-2025.
Both Ares and Y Combinator have not yet responded to requests for comment.
In a series of tweets, Y Combinator partner Jared Friedman laid out some of the rationale behind the incubator’s foray into the defense industry.
“There are two factors that make this a particularly good idea now: current missile producers are struggling to meet demand, and the rise of drone ships necessitates smaller missiles,” he explained.
Friedman drew parallels between today’s dominant missile manufacturers and the companies that monopolized the rocket industry over two decades ago when SpaceX was founded.
By developing reusable launchers, SpaceX significantly reduced the cost of reaching orbit and is now a leader in space launch services. NASA recently turned to SpaceX to bring back astronauts from the International Space Station following issues with Boeing’s Starliner capsule.
“Back in 2002 when SpaceX entered the space launch vehicle market, Lockheed Martin and Boeing were dominating. Similarly, Lockheed Martin and Raytheon are the main suppliers of cruise missiles today,” Friedman noted.
While Silicon Valley and the venture capital community have historically avoided the defense sector, Russia’s invasion of Ukraine in 2022 sparked increased interest.
According to the Washington Post, investors poured $108 billion into defense tech companies between 2021 and 2023, based on data from PitchBook. Additionally, companies like Palantir and Anduril have generated considerable buzz in the sector.
During a panel at the Fortune Brainstorm Tech conference in Park City, Utah on July 17, investors discussed the increasing nationalism in the U.S. and the growing conservative sentiment in Silicon Valley.
“We are definitely witnessing a shift towards conservatism, which is one reason why investing in defense technology is no longer off-limits,” said Jenny Xiao, a partner at Leonis Capital.
