Black Marlin Defense Bi-weekly: September 18th, 2025
The U.S. Army’s launch of FUZE represents a deliberate break with the status quo in defense acquisition. Instead of waiting years for large programs of record to crawl through the bureaucracy, FUZE channels hundreds of millions of dollars annually into staged, venture-style bets on emerging technologies. Portfolio discipline, soldier feedback, and rapid prototyping now sit alongside traditional requirements and milestones.
Why now? Part of the answer lies in funding priorities. In its FY 2026 request of $197.4 billion, the Army carved out $4.9 billion in divestments from legacy systems to fund modernization. Platforms like older UAVs and artillery pieces are being retired to create space for dual-use capabilities in autonomy, counter-drone systems, and energy resilience. Rather than trimming at the margins, the Army is actively re-balancing where its dollars go.
The closest relative to FUZE in the Navy is NavalX, which has succeeded in connecting entrepreneurs to sailors and Marines but stops short of being a true procurement engine. Similarly, DIU operates across services, brokering commercial tech into government use but without the service-specific mandate to shed legacy programs. FUZE is unique because it is both inward-focused and structural. It exists not to scout the market, but to change how the Army itself invests.
For business leaders and venture capitalists, this matters. According to Bain & Company, defense venture investment quintupled over the past decade, with $6.7 billion invested across 99 deals in 2024. Bain projects that VC-backed defense firms could capture 5 to 7 percent of the market by 2030, up from just 1 percent today. That growth will not come from splashy demonstrations alone. It will depend on how well startups align with the Army’s new venture-style criteria: readiness in contested environments, integration pathways into logistics and C2, and resilience through DoD’s uneven funding cycles.
For a VC eyeing a dual-use drone startup, FUZE is a signal. It shows that the Army is willing to fund risk earlier, provided companies can prove utility in both commercial and military contexts. The synergies are clear: investors gain government tailwinds, the Army gains access to innovation at commercial speed. Both sides benefit so long as we remain vigilant about fraud, waste, and abuse, and ensure accountability in how these systems are tracked, stored, and sustained. Industry has to consider the DOD’s concerns relating to the hazards of lithium-ion batteries and unmanned platforms required infrastructure, maintenance, and security, not just capital or runway.
The final question is what this shift means for programs of record. If venture-style acquisition continues to gain ground, will the next generation of defense startups graduate into traditional programs, or will the model itself reshape the entire acquisition pipeline? It seems the DOD is breaking from the status quo. Acquisition is shifting toward firms that can deliver capability quickly, reliably, and repeatably, in line with the pace of technological change. Think Moore’s Law for compute and Wright’s Law for cost curves in advanced manufacturing and autonomy. For venture, the challenge is not whether to engage, but how to predict success and identify the companies that could become true defense unicorns in a landscape where speed, adaptability, and scalability are becoming the real currencies of innovation.
https://www.bain.com/insights/defense-investment-at-a-turning-point
