For deep tech startups and local SME’s working on dual-use products and services, Defence minister Richard Marles has cracked open a window to new opportunities through private sector capability development and alternative financing models.
Unveiling the 2026 National Defence Strategy (NDS26) at the National Press Club on Thursday, Mr Marles outlined steep increases in spending as befits the more complex and dangerous geopolitical circumstances.
The macro headline numbers related to spending as a proportion of GDP (hitting 3 per cent in 6 years) and the big-ticket acquisitions like the submarines, the long-range missiles, the ships and the space infrastructure.
But the 2026 strategy is revealing in the changes to the six priority areas for Defence innovation, science and technology:
- Long-range fires and hypersonic weapons
- High-energy lasers
- Autonomous systems
- Quantum technologies
- Artificial intelligence
- Undersea warfare
Leaving aside the first and last as purely defence priorities, each of the other four dual-use technologies are areas where Australia has decades of research expertise, and many promising deep tech startups.
The NDS26 makes clear Defence’s growing appetite for new models for financing and acquiring new capabilities.
The NDS26 outlined a $500 million boost (over ten years) to the Advanced Strategic Capabilities Accelerator (ASCA), but also new willingness to work with the private sector and private capital to development new capability.
Defence announced in February plans for a new Venture Capital fund of around $1 billion or more – with the government co-contributing with an initial $500 million.
The government is clearly hoping to attract private venture dollars locally – including from Australian superannuation funds – as well as potentially from international partners of an AUKUS/Five Eyes flavour.
The defence and dual-use sectors offer huge opportunities for local entrepreneurs and a new pool of VC can only be a good thing.
What comes next is important. Specifically, in how these private sector and private capital defence innovation efforts are coordinated into the Defence capability acquisition efforts.
That is, ensuring that there is a procurement pipeline more easily available to local innovators.
The Defence leadership will draw comfort from the experience of programs like Anduril’s Ghost Shark, the autonomous undersea vehicle that was co-developed on fixed cost terms and on super ambition timelines.
But we will need to wait for the forthcoming 2026 Defence Industry Development Strategy. This will provide not only an update to the seven Sovereign Defence Industrial Priorities that were last outlined in 2024, but it should provide indicators as to how alternative defence financing models will work.
There is plenty of interest in DefenceTech right now in Australia and for good reason.
Do you know more? Contact James Riley via Email.