Navy’s tech chief wants venture capital firms as partners, not competitors, in defense innovation

The U.S. Navy is changing how it brings new technology into the fleet, and its top technology official is pitching that approach directly to the venture capital community. Justin Fanelli, the Navy’s chief technology officer, said in a recent interview that the service is increasingly looking to co-invest alongside private VCs rather than bankrolling early-stage research on its own — a shift aimed at pulling commercial innovation into defense applications faster.

The strategy is already showing up in the Navy’s procurement pipeline. Among recent awards is a roughly $562 million contract for autonomous refueling capabilities, a deal that underscores the service’s appetite for mature, commercially developed systems rather than technologies built from scratch inside government labs.

A updated wish list for founders

Fanelli also pointed to the Navy’s refreshed technology priorities, which span a broad set of frontier fields. Founders working in artificial intelligence and quantum technologies are among those the service wants to hear from, alongside other emerging areas on the Navy’s updated list of needs. The message: builders who align their roadmaps with defense requirements may find the Navy willing to move quickly — even, as Fanelli described, taking meetings mid-sprint en route to a classified flight.

The co-investment model has implications beyond defense contractors. Companies with commercial data management offerings, for example, could see defense demand as a complementary market alongside their core businesses. Quantum Corporation (QMCO), which sells storage and data management software for unstructured data across the Americas, Europe, the Middle East, Africa, and Asia Pacific, is one public company in the technology hardware space whose products touch workflows relevant to large-scale data operations. The stock closed at $24.24, down 1.13% from the previous close of $24.52, giving the company a market capitalization of roughly $955 million.

Why co-investing matters

By sharing risk with private investors, the Navy reduces the cost of backing unproven technologies while giving startups a credible path to government revenue without surrendering their commercial focus. Fanelli’s pitch to investors frames the Pentagon’s largest naval service as a potential customer and co-funder rather than a slow, bespoke buyer — a departure from the traditional defense acquisition playbook that often required years of specialized development.

The approach also reflects a broader Pentagon push to tap the commercial tech ecosystem, where much of the leading work in AI, autonomy, and quantum computing is now happening outside traditional defense primes.

What to watch

• Additional large awards following the $562 million autonomous refueling contract, which could signal the pace of the Navy’s new buying approach
• Updates to the Navy’s public technology priority list across AI, quantum, and adjacent fields
• Upcoming earnings reports from public companies in relevant sectors for commentary on defense demand

Source: original release