One would think that the role of venture capital in defense would be simple, and that firms would be lining up to invest. But in reality, that's not the case.

SIMI VALLEY, Calif. — For the last few years the Pentagon and technology community have muddled through efforts to improve cooperation, eliminating barriers to entry.

But even as these efforts happen in the United States, so do they around the globe. Allies are in some cases forging their own path that doesn’t rely so heavily on the U.S. And countries that may not have the ability to invest in their own tech development are looking elsewhere — sometimes with potential geopolitical ramifications.

For the second year in a row, Defense News hosted a roundtable discussion in California to discuss the state of the Pentagon’s efforts to engage with the commercial tech community — this year digging into the challenges and opportunities that come with investment in defense development.

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During that discussion, Trae Stephens, chairman of Irvine, California-based Anduril Industries and partner at venture capital firm Founders Fund, provided an international snapshot.

Here are the highlights.

As we look at Pentagon efforts to better engage with the tech community, are there lessons to be learned by what’s happening internationally? Or is the U.S. further along?

We shouldn’t forget that we followed the lead of the U.K. They started [the Government Digital Service] before we did. That was their idea. They’ve been incredibly innovative with trying to get out front with special forces and deploying new capabilities into production very rapidly. There’s a lot of lessons that we’ve learned there.

There’s another edge case in Israel. Israel has the unique setup of mandatory conscription, which means that for at least a few years, once a person reaches adulthood, [the military] has perfect access to the talent pool. They’re able to do innovative things inside of the government that other nations that don’t have mandatory conscription can do.

And third is France. [French President Emmanuel] Macron has been incredibly vocal recently. He started to talk a lot about the importance of building up a European defense alliance for technology and the importance of sovereign technology. What that means is that there is literally a movement inside the French government to clone Palantir because they don’t want to have U.S. companies having the keys to the kingdom.

So they want to ensure control of their own data.

Who knows how successful these things will be? But it is interesting that there’s a strong sovereignty movement that’s happening in Europe that we didn’t see 10 years ago. There are probably all sorts of diagnosis you could make of the causes of that, but it’s kind of fraying at the edges of NATO. [U.S. President Donald] Trump said that Syria was their neighborhood, not our neighborhood, so I think [allies in Europe] are starting to feel the pressure to take ownership of these things more than they did before.

We talk a lot about trade war with China. There is a trade tension as well between the U.S. and our allies in Europe right now.

As an investor, do you have any interest in putting money behind international tech efforts?

I would, sure. The key thing for me is the eyes on them. In a place where there’s a democracy — where the constituents make decisions about ethical uses and following international treaties and sustaining rule of law, I think these are places where I would not only be willing to [invest] but also where I feel we have a duty to [do so] for upholding those values.

Now, there are other countries, of course, that are as aspirational, but it’s deeply at odds with their government. In those cases, I think we need to think long and hard about the implications of those nations taking a leadership [role] in the technologies that we’re trying to develop. As we’ve seen over the course of history with chemical [and] biological weapons, nuclear weapons, all sort of military technologies: Who holds the power holds the keys to setting international norms for how those technologies are used.

Just [recently] it became evident that China was trying to control the international telecommunications union for establishing regulatory standards for the uses of facial recognition. We’re not exporting anything in that category; therefore, we have no seat at the table. And if we lose that battle, I fear that we will become subject to the insidious moral standards of autocratic regimes.

Doesn’t that circle back to America’s need to cooperate with allies?

It’s much easier to be united when there’s a clear hegemony, where people are lining up behind the values. I think it’s much harder in a bipolar, multipolar geopolitical situation. I don’t envy their position, but if you’re an Eastern European nation or a Middle Eastern nation, you have to decide: “Do I believe that the West is going to win this conflict, or is China? Whose side do I want to be on?” Spoils go to the victor.

You have to kind of make some tough decisions. You’re seeing this in places like Africa as well, where China has this tremendous Belt and Road [Initiative] advantage where they said: “We are willing to come in and invest in infrastructure; and the trade that we’re going to be making is for access to your market.” This is super concerning.

Jill Aitoro is editor of Defense News. She is also executive editor of Sightline Media's Business-to-Government group, including Defense News, C4ISRNET, Federal Times and Fifth Domain. She brings over 15 years’ experience in editing and reporting on defense and federal programs, policy, procurement, and technology.

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