Last fall, Jai Das, a partner at Sapphire Ventures, was at a cloud conference in Chicago and grabbing a bite to eat with Rob Slaughter, founder of a promising young startup. They got to talking about how Slaughter’s company, the cheerfully named Defense Unicorns, had bootstrapped its way to nearly $30 million in annual revenue and secured a large portfolio of work across the military and prime contractors.
Das flew home that night but didn’t stop thinking about their chat. Three days later, he sent a term sheet.
Now, Defense Unicorns, a startup that creates open-source software for national security systems, has announced it raised $35 million in a round of funding led by Sapphire Ventures and Ansa Capital. The investment is the first outside capital that the four-year-old company has taken.
“How software is built and deployed for the Department of Defense feels really archaic. Everything was built from the ground up, almost like an IBM stack,” said Das in an exclusive interview with Business Insider. “That is why we are so excited. It’s a great team, with a great purpose, and a great business model that has worked over and over again.”
Sapphire’s speedy close is the latest indication of a hype cycle swirling in defense tech. Anduril and Palantir’s success has shown room for challengers, siphoning work away from traditional defense contractors. Betting the trend will continue, venture capitalists have doled out more than $100 billion into defense tech since 2021, according to PitchBook data. Startups like Shield AI and Skydio have raised new funding at nosebleed valuations.
Defense Unicorns is on a mission to upgrade the military’s software stack. The company takes commercial and government software and packages it using its open-source tools with specific use cases in mind so it will work within the high compliance and cybersecurity constraints that are common in mission environments.
Slaughter, a trained physicist and Air Force veteran, and his two cofounders have seen firsthand the challenges facing software buyers. They spent over a decade working at software factories under the Air Force and the Department of Defense, such as Kessel Run, Space CAMP, and Platform One. In 2020, they came together to solve some of the technical hurdles that prevent the delivery of working artificial intelligence and software tools in military operations across land, sea, air, and space.
“People are going to war with software older than they, and that’s terrifying to me,” Slaughter said on a call.
The company has quickly made inroads at America’s oldest and largest government agency. In 2022, Defense Unicorns was awarded a $300 million contract by the Department of Defense to help military forces buy, build, deploy, and sustain software in classified and offline environments. Since then, Slaughter said it’s received task orders totaling over $100 million as part of the five-year contract.
The world of open-source software for the military is small, making the opportunity much greater. Lockheed Martin has released an open-source project for managing the software supply chain. TestifySec, a tiny startup building open-source software for the Department of Homeland Security, raised a $6 million seed round last fall.
This year, Defense Unicorns says it will use the initial round of funding to go on a hiring spree. It plans to double its fully remote team of 125 employees, adding more product managers, data scientists, and software engineers.
Defense Unicorns will compete for talent in artificial intelligence with tons of other startups. However, Slaughter says that his startup makes a stronger pitch to job candidates than those companies helping merchants close more sales or serve more relevant ads.
“That’s still important work,” he said, “but I don’t think that feels the same as developing systems that secure and support national security.”
