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{shortcode-21cc3534b02e5a90dd1b6e61be0fe28423896a7e} new class of startups is taking hold in Cambridge — and unlike the life sciences firms that the city built its wealth on, they’re not making cancer treatments or testing novel vaccines.
Instead, they’re building autonomous drones and producing self-navigating ships for the U.S. military.
The startups’ founders are counting on a new appetite among investors for firms that want to position themselves at the bleeding edge of military technology. Meanwhile, as biotech firms shed jobs and life sciences funding dries up, policymakers have started to see defense technology as a way to buttress the Massachusetts economy.
The new defense innovation pipeline that’s taking shape across the country is giving small Cambridge companies and hopeful startups a shot at contracts historically monopolized by legacy manufacturers.
As the government has become more interested in working with “non-traditional” and small defense companies, industry experts say Cambridge may become one of the nation’s fastest-growing hubs for defense and national security startups. The shift has favored companies designing small and rapidly deployable technologies, and early success stories — like the defense and surveillance software firm Palantir — have increased investor confidence in the industry.
“There’s a massive effort going on in the federal government right now to switch away from these lethargic, old ways of doing things and start introducing more venture capital-oriented R&D techniques,” said Jeff A. McChesney, CEO of Target Arm, a start-up developing drone launch and recovery systems from moving vehicles.
Two months ago, Massachusetts Gov. Maura T. Healey ’92 announced the state would invest $47 million into defense innovation and chip manufacturing. Her announcement came after the Trump administration launched a fusillade of attacks against the state’s universities — including Harvard — and slashed grants for research and development.
Meanwhile, Secretary of Health and Human Services Robert F. Kennedy has taken a hatchet to health research grants and made changes to vaccine approval policies that have complicated the path to market for life science companies.
For Massachusetts, which receives more than $8 billion in annual research funding, the cuts could be existential — one University of Massachusetts Amherst study estimated the funding supports 81,300 jobs and $16 billion in economic activity.
The new investments aren’t just from the government’s end, either. In the second quarter of 2025, private investors poured more than $19 billion into US defense startups — a whopping 200 percent increase from the same quarter last year, according to data from Pitchbook.
Ryan Carrithers, the chief financial officer of Merlin Labs, a Boston-based startup that develops autonomous flight technology for military missions, described “a big uptick” in defense tech investment by venture capitalists, driven by geopolitical instability.
“Investors are looking at defense tech as a very big opportunity for the future,” said Thomas Kenney, CEO of Tycho.AI, which develops autonomous intelligence, primarily for drone navigation.
Tycho.AI — whose headquarters is just outside Kendall/MIT Red Line station — was founded in 2022, based on research at MIT developing alternative navigation systems for areas where GPS cannot be used. Today, they are honing their technology for military applications like making drones and aircraft more adaptable on military missions.
In the past 18 months, Tycho.AI has raised $5.5 million in government contracts, according to Kenney. He also said that start-ups like Tycho.AI will stand to benefit greatly from Healey’s investment package — dubbed SHIELD — which he said will allow the firm to use components manufactured locally, just an hour or two away from Cambridge.
Tycho.AI also markets its technology for potential non-military applications, including agriculture and emergency response, although Kenney said the company isn’t currently working on those.
“Our technology can be more than defense. But we’re very specific with our investors, we’re very specific with our customers to talk about how we are a defense-first company,” Kenney said.
Even though the highest-profile names in today’s corporate Cambridge are in biotech and software, the influx of defense startups hearkens back to an earlier era in the city — which, in 1922, saw the birth of Raytheon, now synonymous with the old guard of defense contractors.
MIT, in particular, has long been connected to research with military applications, with its Lincoln Laboratory being founded in 1951 as a center to develop cutting-edge air defense systems for the Department of Defense.
“Cambridge has always been a place for the defense sector, where the ecosystem had all the things you need to be successful, including academia for research and development,” said Eric Rosenbach, chief of staff of the Department of Defense from 2015 to 2017.
But those defense companies have also faced hostility from Cambridge’s progressive-leaning population. Last year, Elbit, an Israel-based defense contractor, abandoned its Central Square lease a year early after months of protests by pro-Palestine activists outside its offices.
In 2015, Ashton B. Carter, the U.S. Secretary of Defense, created the Defense Innovation Unit — a branch focused on identifying emerging technologies with military applications — with the aim of creating a stronger ecosystem of defense startups. It was first established in Silicon Valley, later expanded to Austin, Texas, and then made its way to Cambridge, drawn in by the strength of the city’s biotech sector.
Rosenbach, who worked with Carter during the DIU’s founding, said the Cambridge and Boston area have been among the project’s “most successful” locations.
Changes in the Defense Department’s contracting methods have made it more profitable for start-ups to deliver products and take on risk, instead of merely aiming to be acquired by legacy defense companies.
Startups like Tycho.AI are seeing multimillion dollar contracts. Others — like Merlin, whose headquarters sit in an office between South Station and Chinatown — are also going public. The company is gearing up for its initial public offering next year, which values the company at around $800 million dollars.
The company’s IPO is a significant milestone for an industry where start-ups have typically been acquired by larger companies before they could turn into competition. It signals a change in the industry, one where start-ups are reshaping the defense innovation pipeline and becoming formidable challengers.
“I think you’ll see more and more companies growing and potentially going public, instead of being swallowed up by one of the larger companies,” said Carrithers, the CFO of Merlin.
Rosenbach said that legacy defense companies aren’t able to keep up with the speed of innovation in start-ups.
“The big giants — like those big defense primes of Lockheed, Raytheon, the others — they’re moving more slowly. They don’t have the type of capabilities that the military is looking for right now, and there’s a lot of momentum behind the smaller firms,” he said.
New Defense Department policies have also facilitated that shift, making it easier for the government to integrate emerging technologies from smaller companies with military systems.
But defense tech is not just drones. Cambridge’s existing biotechnology focus and emerging defense culture make it poised to welcome biosecurity companies, which have also seen increased government and investor interest.
McKnight said that, in Cambridge, a biotech “winter” of slowing drug development may provide an opening for biotech-based entrepreneurship around defense. He sees a future in biosecurity, or tools designed to detect and guard against disease outbreaks and biological weapons.
Rosenbach, currently a senior fellow at the Kennedy School, said the increasing number of veterans at Harvard schools who are working on defense-related projects is also accelerating growth in the defense tech area.
“I really think the biggest change has been in vets who are going to Harvard Business School and the Kennedy School, especially in a joint degree way, that are really interested in continuing to try to find a way to help the country,” he said.
Kenney and McChesney — the CEOs of Tycho.AI and Target Arm, respectively — were both National Security Fellows at HKS.
It’s not just veterans who are interested in defense, but college students from both Harvard and MIT, who are actively founding their own ventures or going to work for legacy defense companies.
Three Harvard seniors founded Distributed Spectrum, a radio frequency monitoring technology in 2020. This year, Distributed Spectrum secured $7 million in contracts with the Defense Department. And initiatives like the QLab accelerator at HKS support Harvard and MIT students in entrepreneurship around defense and national security.
“Harvard has a long history of doing research for the Department of Defense,” Rosenbach said.
McChesney said that the robotics expertise coming out of universities like the Massachusetts Institute of Technology, Worcester Polytechnic Institute, and Northeastern University is a part of the appeal, too.
“The Massachusetts community, especially Boston, is the robotic center of the United States,” McChesney said. “There are other pockets, like in Pittsburgh with Carnegie Mellon, down in the Raleigh-Durham triangle, maybe down in Austin and maybe out even in Silicon Valley. But Boston has the thing that no one else has, which is this huge academic environment to draw upon.”
—Staff writer Stephanie Dragoi can be reached at stephanie.dragoi@thecrimson.com.
—Staff writer Thamini Vijeyasingam can be reached at thamini.vijeyasingam@thecrimson.com. Follow her on X @vijeyasingam.
