Vannevar Labs Reconnects Silicon Valley with Defense Industry

Silicon Valley's Return to Defense Technology

Historically, Silicon Valley was a significant contributor to the defense industry, producing crucial chips and technologies during the Cold War. However, in recent decades, the region became more recognized for consumer internet companies like Google, Facebook, and Netflix.

Currently, a growing number of startups are working to re-establish the connection between government and industry. This resurgence is driven by increasing concerns about China and a renewed focus on maintaining America’s technological superiority in defense planning.

Vannevar Labs: A New Approach

Vannevar Labs represents this new wave of companies. They are striving to challenge traditional defense contractors by applying Silicon Valley’s entrepreneurial spirit to national security challenges.

Initial discussions with the company took place in late 2019, following a $4.5 million seed funding round. For the past two years, Vannevar Labs has been focused on product development and gaining traction within the defense community.

Product Launch and Investment

In January of this year, Vannevar Labs officially launched Vannevar Decrypt, a product specializing in foreign language natural language processing.

The system organizes and analyzes overseas data collected by intelligence agencies, providing rapid translation and interpretation for policymakers. CEO and co-founder Brett Granberg reported the product quickly expanded from a single deployment to a dozen adoptions.

In May, the company secured a $12 million Series A investment led by Costanoa Ventures and Point72, with participation from General Catalyst. Both Costanoa and General Catalyst had previously co-led the startup’s seed round.

Growth and Key Personnel

Vannevar Labs has been actively expanding its team, now comprising 20 employees. Scott Sanders recently joined as the head of business development, bringing experience from Anduril.

John Doyle, formerly head of national security at Palantir, has also joined the company’s board. The team is currently balanced between national security experts and technologists, with plans to double in size this year.

Lessons Learned in Defense Tech

Brett Granberg has identified key strategies for defense tech startups to succeed in the challenging Pentagon market.

Focus on End Users: It’s crucial to gain access to and understand the workflows of actual end-users. The tasks performed by defense and intelligence personnel differ significantly from those in the commercial sector.

Adaptability is Key: The development of Decrypt demonstrates this principle. The product initially focused on counter-terrorism but shifted to address emerging threats as government priorities evolved.

Rejecting the "Dual-Use" Model: Granberg cautions against the idea of technologies equally applicable to commercial and defense sectors. He believes the most critical mission problems require specialized solutions that cannot be effectively addressed by off-the-shelf commercial products.

He predicts that companies relying on a dual-use approach may struggle and potentially fail in the coming years.

Scaling Through Product Diversification

Granberg advocates for a multi-product strategy, moving beyond the model of a single platform. He believes each product can generate substantial revenue – potentially hundreds of millions – but scaling requires parallel product development.

Vannevar Labs dedicates 10% of its resources to exploring new product lines, envisioning a portfolio of nine to ten products within three to four years.

While Palantir’s success with a single platform is acknowledged, Granberg points to Anduril and Shield AI as examples of companies built around product line expansion.

A Collaborative Ecosystem

Granberg emphasizes a collaborative spirit within the defense tech sector. He suggests that the success of one company benefits the entire industry.

The diverse mission requirements of different agencies and the substantial budgets available create ample opportunities for startups, even when competing with established defense contractors.

Future Goals

Vannevar Labs’ immediate objective is to achieve “program of record” status for its Decrypt product. This would guarantee a consistent revenue stream for years to come, marking a significant milestone in the company’s growth.