Defence wants VCs to co-invest $500m in ANZ defence tech startups
The federal government has opened expressions of interest for venture capital firms to co-manage a $500 million defence technology fund. The Advanced Capabilities Investment Fund will back Australian SMEs and startups developing defence and dual-use capabilities.
What they are funding
Target areas: cyber, AI and autonomy, electronic warfare, quantum technologies, undersea warfare, and what Defence calls "kinetic and kinetic-enhancing capabilities" (missiles, bombs, artillery). The fund emphasises export potential alongside sovereign capability.
Defence Industry Minister Pat Conroy positioned this as catalysing "growth of Australia's innovation ecosystem, sovereign industry capability and exports potential." Translation: the government wants private sector expertise to help scale defence tech, not just traditional procurement.
The context
This is part of a broader $1 billion defence industry push announced in early 2026. Australia's defence budget sits at 2-2.33% of GDP, with pressure to hit 3% amid AUKUS commitments and Indo-Pacific tensions. The 2025-26 defence budget reached $59 billion, up 4.2% nominally but only 1% in real terms.
Recent momentum: Austal Defence landed a $1 billion contract for 18 landing craft in late 2025, then a $4 billion contract for eight heavy landing craft in February 2026. Those Henderson Shipyard deals created 3,000 jobs with 60% Australian expenditure mandated for local supply chains.
What this means for sales
Defence tech hiring will accelerate across ANZ, particularly in Western Australia's emerging hub. Startups securing fund backing will need commercial teams to pursue both government contracts and export opportunities. Many Australian defence startups already work with US military contracts, including Advanced Navigation's GPS-jamming work with US Defence.
Expressions of interest close April 30. If you are in enterprise sales at a dual-use tech company, your founders are likely watching this closely.
Sales implications
- New buyers: Defence procurement teams, export customers in allied nations
- Deal cycles: Government contracts run 12-24 months, require compliance expertise
- Comp structure: Defence tech AEs typically see $140k-$180k OTE, weighted toward salary given longer cycles
- Territory: Expect national patches with WA concentration, potential APAC export focus