USA Nation Building will accelerate more VC investments into the Startup Ecosystem

The inauguration of President Donald Trump has ushered in a bold vision for America's future, particularly with his commitment to space exploration and national security. By pledging to "..pursue our manifest destiny into the stars, launching American astronauts to plant the Stars and Stripes on the planet Mars” the President has set a course for unprecedented advancements across various industries. This transformative agenda is expected to galvanize venture capital (VC) investments, catalyzing innovation in sectors such as aerospace, defense, technology, energy, and healthcare. The ripple effects of this initiative could redefine the startup ecosystem, offering both challenges and opportunities for investors and entrepreneurs. This article explores how VC investments will be shaped by this vision, highlighting key trends and notable examples from each sector.

1. Aerospace & Defense: From 2016 to 2022, the defense-tech sector attracted approximately $135.3 billion across 4,744 deals, indicating robust VC interest. We can expect this area to attract more investments in the following years. We can also expect Mega funds (1B+) invest in early-stage through late-stage startups in this space. Notable Investments include Anduril Industries raised $1.5 billion to develop autonomous defense systems, reflecting heightened VC interest in national security technologies. Startups such as Shield AI, specializing in AI-powered autonomous aircraft, is set to nearly double its valuation to $5 billion through a new $200 million fundraising round (Financial Times). Startups such as Boom which is into supersonic air travel can benefit from crucial investments due to the investment momentum in this space.
2. Technology & Engineering (Robotics, AI, Advanced Materials): In 2023, AI-focused companies secured over $50 billion globally, accounting for over 25% of all U.S. startup investments (WaveUp). While we can expect all the Tech Majors to invest heavily in AI applications. Generative AI alone attracted nearly $45 billion in VC funding in 2024, almost doubling from $24 billion in 2023.(Source: EY US). Tech Majors such as Google, Salesforce, Meta are increasing their investments into this space. With the easing of regulatory scrutiny expected in the new administration, we can expect the pace of investments and related M&A to pick up as well. This is great news for startups and funds such as Sequoia, a16z, Lightspeed, General Catalyst amongst others as reduced regulatory barriers can facilitate smoother exit strategies through acquisitions, enhancing returns for these investors. 
3. Energy (Nuclear Propulsion, Solar Power, Energy Storage): While specific figures for energy innovations related to space are limited, the sector has seen emerging interest, especially in technologies supporting sustainable and efficient energy solutions for space applications. Startups such as Arbor, General Matter, LumenOrbit and Atherflex have invested heavily in innovative efforts within the SpaceTech industry to develop advanced energy solutions, leveraging space-based resources and technologies to meet both extraterrestrial and Earth-based energy needs. Some of the investors in this space include prominent firms such as a16z, and Sequioa amongst others such as Y-Combinator. We expect this trend to continue well into the next decade due to the inherent need for innovation in new energy sources.
4. Manufacturing (Precision Manufacturing, Materials Development): Deep tech, encompassing advanced manufacturing and materials, claimed a 20% share of total VC investments, doubling over the past decade. (BCG Global). Companies focusing on precision manufacturing for aerospace applications have attracted significant VC interest, reflecting the strategic importance of this sector. Silicon Valley venture capital firms have played a pivotal role in advancing precision manufacturing startups in aerospace. Notable companies include Relativity Space, which uses 3D printing for rocket manufacturing, supported by Y-Combinator and Social Capital; Velo3D, specializing in metal additive manufacturing with backing from Khosla Ventures and Bessemer Venture Partners, and Made In Space, focused on in-orbit manufacturing with funding from Draper Associates, Atarbridge, et al. These investments drive innovation and maintain the aerospace sector's competitive edge. Further, startups such as Varda Space Industries, a U.S.-based startup, focus on manufacturing products and pharmaceuticals in space for terrestrial applications. The company has secured substantial funding, totaling $141 million, to develop its space-based manufacturing capabilities.
5. Finance (Space-Focused Investment Funds): Established funds like the NATO Innovation Fund, a €1 billion venture capital initiative, underscores the growing financial commitment to defense and space tech startups. (Financial Times) In 2024, the European Defense Fund committed €1.1 billion towards various military research projects, including space-related technologies.(WIRED). Several space-focused venture capital funds have emerged in recent years, driving significant investments in Silicon Valley startups. Notable examples include Founders Fund, with $12 billion under management and early investments in companies like SpaceX; Space VC, focusing on seed-stage investments in frontier technologies including space and security; Crosscut Ventures, which launched a $100 million fund in 2024 targeting space exploration and advanced manufacturing; and Seraphim Capital, the first venture fund dedicated to the space ecosystem, investing in satellite and drone-enabled industries. These funds highlight the growing momentum in space-focused innovation and development.
6. Healthcare (Space Medicine, Life Support Systems): While specific VC investment figures in space medicine are difficult to ascertain, the increasing interest in long-duration space travel is likely to spur future investments in this niche and emerging sector. Innovations in biotechnology and life sciences are attracting VC attention, particularly those with applications in extreme environments found in space. Recent advancements in space medicine highlight significant innovations and investments. XRHealth has raised $40.8 million to develop a VR telemedicine platform supporting astronauts in space and patients on Earth. NASA's holoportation technology enables real-time, 3D telemedicine consultations, enhancing medical support during missions. Additionally, the Translational Research Institute for Space Health (TRISH), backed by NASA with $134.6 million through 2028, focuses on maintaining astronaut health through translational research. These efforts demonstrate a strong commitment to advancing healthcare for both space and terrestrial applications.
7. National Security (Defense and Cybersecurity): The inauguration of President Donald Trump is expected to positively impact the national security sector, benefiting defense and cybersecurity startups. As a precedent, Private equity and VC firms invested $2.6 billion in defense startups between January and September 2024, surpassing the $2.2 billion invested in all of 2023 (Source: S&P Global). In-Q-Tel (IQT), the U.S. intelligence community's investment arm, leads in backing defense and dual-use technology startups, with investments in 35 of the top 100 companies as of July 2024. Y Combinator made its first defense investment in Ares Industries, a missile production startup focusing on cost-effective anti-ship cruise missiles. Private equity firms remain optimistic about opportunities in the defense sector in 2025, driven by heightened global tensions and bipartisan military spending support. Additionally, former UK Defence Secretary Sir Ben Wallace joined Boka Group to guide investments in military technology ventures, further enhancing sector growth. These factors create a promising landscape for innovation and investment in national security.

In summary, the alignment of public policy and private investments in the wake of President Trump's inaugural address has created fertile ground for innovation in the startup ecosystem. Sectors such as aerospace, defense, and advanced manufacturing are set to benefit from a surge in venture capital while emerging fields like space medicine and energy solutions are poised for transformative growth. By fostering reduced regulatory hurdles and fostering a pro-investment climate, this new era promises to accelerate technological breakthroughs and bolster America's leadership in space and national security. The opportunities for startups and investors alike are boundless, signaling an exciting future for innovation-driven progress.

Quoting Yoda: "A Jedi must have the deepest commitment, the most serious mind... All his life has he looked away... to the future, to the horizon.". Those in the startup ecosystem are the Jedi who can breach the horizons and start building the future today!