Navy CTO pitches VCs on co-investing in defense tech

Navy Chief Technology Officer Justin Fanelli is making a direct pitch to venture capitalists: co-invest with the Navy instead of expecting it to fund early-stage research on its own. Speaking even as he rushed to a classified flight, Fanelli outlined a strategy where the Navy shares the financial risk of developing new technologies, a departure from traditional government-funded R&D.

Fanelli pointed to recent acquisitions as evidence of this approach, including a $562 million autonomous refueling contract. That deal suggests the Navy is willing to write large checks for mature systems, not just seed-stage experiments. He also updated the service's wish list, highlighting AI and quantum as areas where founders should focus their next ventures.

The pitch is aimed squarely at investors who might otherwise see defense contracting as slow or opaque. By inviting VCs to co-invest, the Navy hopes to speed up adoption of commercial innovation while spreading the cost of failure. The source notes this is a single perspective, but it signals a notable shift in how the Navy views its role in the startup ecosystem.