Why Private Markets: The Case for Venture Exposure in Defence

ALTERNATIVE PERSPECTIVES | DEFENCE IN FOCUS • MAY 29, 2026

 

Key Takeaways

  • A growing share of defence-relevant value creation is occurring outside of public markets, particularly in dual-use sectors where commercial innovation shapes future capability.
  • Private markets are becoming a more important access point because they help finance not only early-stage innovation, but also the commercialization, scaling and industrial buildout required to bring those capabilities into the sector.
  • Within the broader private-market landscape, venture capital is a necessary input to the defence ecosystem and often the most direct way to access the early inflection points that shape how new capabilities are developed and scaled.

For many investors, defence exposure has long been synonymous with large public contractors and direct participation in government spending. That remains a core component of the sector, but it no longer captures the full range of where value is being created.

Many of the technologies now shaping future defence capability are emerging from a very different part of the market: earlier-stage companies working in areas such as artificial intelligence, autonomy, cyber security and advanced manufacturing, often with roots in commercial rather than purely defence applications. These businesses can spend years refining products, building traction and establishing strategic relevance before reaching public-market scale or visibility.

That shift changes where value is created and how investors are able to access it. As capability becomes more software-defined and more closely tied to dual-use technologies, a greater share of defence-relevant value creation is occurring earlier in the product lifecycle. Emerging firms develop and refine capabilities that primes later integrate, scale or incorporate into larger systems. Private markets are now part of the mechanism through which those capabilities are developed and brought into the sector. Within that broader private-market landscape, venture capital is especially relevant because it finances companies while those capabilities are still being developed and before much of their long-term value is reflected in public-market valuations.

 

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The views expressed are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds, or investment strategies.

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Published: May 29, 2026. RO:20260519-5489675-17346510