Silicon Valley’s Next Mission: Help the U.S. Catch China and Russia in Hypersonic Weapons

Chief Executive Joe Laurienti working on Ursa Major’s Hadley engine.
Chief Executive Joe Laurienti working on Ursa Major’s Hadley engine.

Summary

Tech founders and investors are placing ambitious bets on superfast missile weapons systems.

The U.S. is years behind its biggest rivals in cutting-edge hypersonic missile technology. Silicon Valley is betting it can help the military catch up.

Venture capitalists, better known for pumping money into business-software services and social-media apps, are now deploying hundreds of millions of dollars into developing the technology for hypersonic weapons the U.S. military wants but has struggled to figure out despite decades of trying. China and Russia already have them ready for use on the battlefield. The U.S. doesn’t. Silicon Valley investors and startups want to help fill the gap.

Silicon Valley’s entry into the hypersonic race is one of the most ambitious examples of its recent dive into the defense industry. Venture capital in the past couple of decades has largely avoided funding expensive hardware development and steered clear of most applications for the U.S. military, favoring technology that requires less upfront money and produces returns sooner.

Seth Winterroth, a partner at Eclipse Ventures, a Silicon Valley defense-tech venture firm that backed hypersonic startup Ursa Major, said the enormity of the technical challenge of hypersonic systems requires collaboration between startups, large defense firms and the government.

“We’re not building widgets here. This is complex engineering," he said. “We are behind our adversaries here, and we’ve got to work together to catch up."

Hypersonic aircraft and weapons fly at five times the speed of sound or faster, which is at least 3,800 miles an hour. The aircraft must be able to withstand temperatures of thousands of degrees. The major powers of the world are in a race to develop the most sophisticated missiles that can be launched from long distances, evade air defenses, maneuver and strike targets quickly—before the enemy can make preparations or even know they are coming.

Defense Department spending on hypersonics makes it an attractive market for venture capitalists; it is also among the riskiest, given the improbability of success. The longest U.S. military hypersonic test flight that is unclassified was just over three minutes.

A Defense Department spokesman said the department’s hypersonic strategy isn’t based on trying to match China’s or Russia’s, and it shouldn’t be compared with any other country.

“We aren’t in a one-for-one arms race with any competitor," the spokesman said.

Venture capitalists have invested more than $500 million into U.S. startups working on the systems in the past two years, according to a Wall Street Journal analysis of venture-capital data from PitchBook. Early-stage funds that have previously backed wildly different businesses—cryptocurrency, videogames, retail or healthcare—are now betting on hypersonics.

Startups, including Hermeus and Venus Aerospace, which are designing aircraft to fly autonomously at hypersonic speeds, are pitching the benefits of using private capital and the latest engineering to lower costs for the Defense Department. The venture-backed companies are building everything from services for launches and flight tests to jets to engines for hypersonic systems—although many are years away from a completed product.

The military has little to show after spending billions of dollars over decades trying to develop the advanced systems. It has no offensive or defensive hypersonic systems in deployment. In 2021, the Defense Department outlined plans to field offensive hypersonic weapons in the early to mid-2020s.

The Defense Department spokesman said the military is on track to field some hypersonic capabilities by mid-decade. He said the department is working with 15 venture-backed startups and other nontraditional vendors for hypersonic testing, manufacturing and sourcing new technologies.

Beijing surprised U.S. military leaders when, in 2021, it launched a hypersonic missile over the South China Sea that traveled at speeds of more than 15,000 mph. Russia is using hypersonic missiles against Ukraine, including a new one Moscow says can travel eight times the speed of sound with a 660-pound warhead.

“America needs to regain its edge in terms of its ability to strike targets at range," said Bryon Hargis, chief executive of Castelion, a startup in California developing a long-range hypersonic weapons system that will include explosives.

Venture capitalists are betting they will have an increasingly eager customer in the Pentagon, which is under pressure to make progress.

The Defense Department has spent more than $8 billion since 2019 on the effort to add hypersonic weapons to its arsenal and has at least $18.7 billion in funding dedicated to ongoing programs, according to a government report. Funding recipients mentioned in the report are the traditional, large defense contractors—known as the primes—including Northrop Grumman.

The Biden administration has named hypersonics a critical technology for national security. At a congressional hearing this month, lawmakers pressed Defense Department officials for details on how they were using breakthroughs in commercial tech to increase hypersonic capabilities.

Heidi Shyu, undersecretary of defense for research and engineering, told members of Congress that the department will triple its rate of hypersonic aircraft testing with the help of tech companies. The department did around 10 test flights last year.

“Going forward, we are utilizing not just our test assets," said Shyu, “but we have opportunity to look at different commercial launches as well."

Colorado-based Ursa Major builds propulsion systems that can power hypersonic aircraft and weapons. Its engine can also be used for test flights that simulate Russia’s hypersonic missile capabilities to help the U.S. better detect and defend against Russian attacks.

Private-sector startups are often better than the Defense Department at taking risks and learning from failures, said Ursa Major CEO Joe Laurienti.

“You’ve got to be ready to blow things up," he said.

The primes are so far winning the biggest hypersonic contracts. RTX, formerly Raytheon Technologies, and Lockheed Martin each recently received billion-dollar contracts to work on hypersonic weapons. Given the scrutiny from Congress, the military is likely to continue to stick with the primes and not take the risk of betting on a startup, industry experts said.

“When the government knows what it needs and has some sense of specification for the tech it wants, historically it turns to the primes," said Noah Sheinbaum, founder of Front Door Defense, a research service for defense startups. Many hypersonics contracts would likely be classified, and a lot of young startups don’t have that clearance, he said.

Another hurdle for investors and startups is the painfully slow process of trying to peddle to the Defense Department.

“The complexity of the sales cycle is actually harder than the complexity of the technical problem, which is brutally hard," said Steve Blank, a longtime startup investor and adviser.

The Defense Innovation Unit, the Silicon Valley outpost of the Defense Department, has contracts with six companies to provide the department with cheaper and more frequent testing of hypersonic weapons. One of these is Rocket Lab, which offers launch services for hypersonic aircraft at a cost of about $10 million for each launch, roughly one-tenth of what the government might pay today, the company says.

Castelion has raised more than $14 million since it was launched 15 months ago and will likely need a couple hundred million more in capital over the next two years to get to its first full missile system. The company is planning its first hypersonic missile test flight in the next month or so.

The sector has attracted a variety of new investors undeterred by the enormous upfront capital needs of these startups. Ursa Major’s backers include Broadway show producer and space enthusiast Marc Bell, an Indian venture-capital firm that also funds anime, RTX and BlackRock.

“As a venture capitalist, you always assume when writing a check the money’s gone," said Bell, whose family office investments range from a pizza chain to a coffee-machine startup to satellites. “Anything after that is a home run."

Sharon Weinberger contributed to this article.

Write to Heather Somerville at heather.somerville@wsj.com

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