Y Combinator’s first bet on SpaceX weapons

Ares Industries launched on Tuesday, promising to produce missiles that can take out ships hundreds of miles away, but 10 times smaller and cheaper than those currently available.

“A war with China in the Taiwan Strait would be nothing like what we’ve seen in Ukraine or the Middle East,” founders Devan Plantamura and Alex Tseng wrote in a post. “DoD wargamers and military experts agree that the most useful weapons in such a conflict would be long-range anti-ship weapons or cruise missiles.”

In the event of a war, the stockpile of US missiles would run out within weeks, and there is not enough industrial capacity to build them at a sufficient rate, they warned.

But $3 million missiles that weigh 3,000 pounds aren’t needed to sink smaller Chinese warships, let alone swarms of $200,000 unmanned surface ships, Plantamura and Tseng added.

“DoD needs smaller, less expensive cruise missiles and lots of them! But no one has yet fulfilled this promise,” they said.

Ares built several prototypes and flight-tested them over the summer in California’s Mojave Desert. The founders said they are on track to deliver “early functioning missile systems” to their first customers by mid-2025.

Ares and Y Combinator did not immediately respond to requests for comment.

One series of tweetsY Combinator partner Jared Friedman explained some of the reasons why the incubator started diving into the defense industry.

“There are two forces in the world that make this a particularly good idea right now: current missile manufacturers have become bloated and can’t keep up with demand, and drone ships mean we need smaller missiles,” he wrote.

Friedman then compared today’s dominant rocket manufacturers to the companies that dominated the rocket business more than 20 years ago, when Elon Musk started SpaceX.

By developing reusable launchers, SpaceX has drastically reduced the cost of getting into orbit and is now the leading space launch company. In fact, NASA just turned to SpaceX to bring back astronauts from the International Space Station after Boeing’s Starliner capsule malfunctioned.

“When SpaceX got into space launch vehicles in 2002, Lockheed Martin and Boeing had formed a duopoly,” Friedman wrote. “Similarly, Lockheed Martin and Raytheon are the only two big players providing cruise missiles today.”

While Silicon Valley and the venture capital community have long kept their distance from the defense sector, Russia’s invasion of Ukraine in 2022 has helped spur interest.

Between 2021 and 2023, investors poured $108 billion into defense technology companies, Washington Post reported in February, citing PitchBook data. Meanwhile, data mining company Palantir and defense technology startup Anduril have also created more buzz in the sector.

During a July 17 panel at Of luck At the Brainstorm Tech conference in Park City, Utah, investors also noted rising American nationalism and growing conservatism in Silicon Valley.

“We’re definitely seeing a trend toward conservatism, and I think that’s one of the reasons why investing in defense technology is no longer taboo,” said Jenny Xiao, partner at Leonis Capital.

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