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One of the reasons why startups are an essential part of American business is that they drive innovation.
Incumbents in big industries are more often concerned with the bottom line than they are with sweeping advancements. This means many industries would risk stagnation if not for the little guys with big dreams.
So, in today's climate - where venture capitalists are shying away from "risky" investments - some might fear a stifling of this innovation. After all, without capital, most startups can't bring their ideas to life.
But fear not. Some of the most influential companies in today's economy were created amidst The Great Recession. Uncertain economic circumstances can separate the wheat from the chaff.
Besides, startups are better off knowing exactly what economic climate they're operating in. The alternative is a startup that came up in the past few years receiving an endless flow of capital - no matter the valuation - and now must adapt to leaner circumstances. It's easier to operate on a budget if you always knew you'd have to.
Of course, some industries are less susceptible to lean times than others. Given the conflict throughout Europe and growing concerns about the capabilities of international powers like China, one of those industries is none other than military defense.
Governments around the world are pouring billions into this sector. There's one particular area of defense tech development that is ideal for the innovation-pushing climate that startups provide, and the opportunities for investors have incredible potential.
Here's what you need to know...
In This Climate, Missiles Are in Demand
In 2020, the U.S. military had a budget of $770 billion. A large percentage of that is dedicated to military contracts with defense companies like Lockheed Martin, Raytheon, General Dynamics, Boeing, and Northrop Grumman.
However, a good bit is also reserved for smaller companies developing technologies the government believes will help it remain on the global defense forefront. We're talking about artificial intelligence, electric aircraft, quantum computing, autonomous defense systems, and much more.
And, in a similar way to the Cold War's impact on the nuclear arms race, much of the modern-day technological focus is directed toward missiles and missile-defense systems.
Now, if you're imagining a startup developing a bomb that is capable of greater destruction than a nuclear one, I've got good news. That's not coming down the pipeline (at least not that we know of).
But there is a growing emphasis on the ability of nuclear weapons to travel intercontinentally. Given the looming threat of conflict from places like North Korea and China, and Russian aggression, this shouldn't come as a surprise.
It's also part of the reason the global rocket and missile market is blasting off (no pun intended). Valued at $61.8 billion in 2021, it is expected to reach almost $100 billion by 2030. Of that overall market, missiles comprised 62% of the 2021 market share.
Of the different kinds of missile tech, hypersonic missiles are the most urgent area of focus. Traveling many times faster than the speed of sound, these missiles are different than traditional missiles, which leave Earth's atmosphere before reentering and eventually landing on their directed target.
Hypersonic missiles do not exit the earth's atmosphere, instead traveling at a high altitude within it. Some of the complications arise when you consider the fact that most military defense systems are not designed to track missiles at these altitudes.
And, with many believing it's only a matter of time until foreign powers develop the ability to transport and deliver nuclear warheads on these hypersonic missiles, the urgency is high to control this subsect of military defense.
After all, the concept of mutually assured destruction was enough to keep the Cold War on ice.
In recent days, China has reportedly developed AI technology that allows them to predict the course of hypersonic missiles. In Europe, Russia apparently tested a hypersonic Zircon cruise missile.
Conventional wisdom suggests the United States is lagging behind both of these countries in their hypersonic capabilities.
That won't be the case for long.
There are startups developing technologies that will help America reclaim the lead in this field. But there are also more developed companies that could be closer to providing immediate relief.
In fact, Lockheed Martin already tried to buy this company. But the U.S. government blocked the transaction for fear it would totally corner the hypersonic missile market.
Regardless, this company could see its sales grow 72X by 2030. Anyone who secures a share of its growth now could potentially be in for a ride that leads to literally generational wealth.