Defense and industrial tech predictions for 2025: energy and data center build-out are the next wave
Jan 6, 2025
Key Points
- Venture capital flowing into defense tech is pivoting toward energy and data center infrastructure, as investors face a shortage of venture-scale defense companies in 2025.
- Microsoft's $80 billion data center spending commitment signals the market is pricing infrastructure projects with the same capital intensity and multi-year horizons as defense plays.
- Coreweave's IPO valuation will test whether the market is ready to treat venture-backed data center operators with the same urgency as defense tech companies.
Summary
Energy and data center build-out are reshaping defense and industrial tech investment
The defense and industrial tech tent has been expanding well beyond pure hardware plays for years—Palantir doesn't make hardware but is clearly defense tech; SpaceX has Star Shield but also operates as a government contractor. But the next wave of capital flowing into this ecosystem won't be defense at all. It's energy and data center infrastructure.
The logic is straightforward. VCs who have built positions across the major defense tech names like Anduril face a scaling problem: there's no obvious next wave of venture-scale defense companies coming in 2025. Rather than sit on deployed capital and expertise, many are pivoting the same analytical lens and deal-making skills toward industrial infrastructure—nuclear, wind, solar, oil and gas, and especially data center build-out.
Microsoft's recently announced $80 billion spending commitment on data center infrastructure is the signal that's pulling capital. One participant notes the number feels modest given the scale of the bet; others read it as proof that the capex intensity and multi-year deployment horizon now characterize both defense and industrial plays. The skill sets overlap. The capital requirements overlap. The thesis becomes: where else can I apply what I've learned?
The broadening started earlier. Andreessen Horowitz's "American dynamism" framing deliberately widened the aperture from pure defense tech to include consumer hardware (the iPhone) and AI infrastructure. That umbrella is now stretching further into unglamorous but capital-hungry utilities and data center operators—the places where compute and energy become inseparable.
The near-term marker to watch is how Coreweave's IPO performs, according to the discussion. That valuation and reception will signal whether the market is ready to price venture-backed data center companies at the same scale and urgency as it does defense tech.