# AIA Highlights Defense Investment Bottlenecks

Private investment in the U.S. defense sector has surged, with venture capital funding increasing tenfold since 2019, particularly benefiting startups in space, artificial intelligence, drones, and software. Despite this growth, critical industrial base gaps persist in areas such as critical minerals refining, semiconductor manufacturing, and solid rocket motor production, where private equity investment remains limited due to high risk and long development timelines. The Aerospace Industries Association (AIA), led by President Eric Fanning, and Bain & Company recommend that government agencies, including the Department of Defense, implement targeted incentives and establish long-term contracting strategies to stimulate private investment in these bottleneck sectors and strengthen the defense supply chain.

- **Why this matters:** Procurement professionals should anticipate increased emphasis on contracting vehicles and incentive programs aimed at addressing industrial base vulnerabilities in Texas and other key regions.
- Companies specializing in critical minerals, semiconductors, and propulsion technologies may find emerging opportunities through government-backed initiatives designed to mitigate investment risks.
- This signals a strategic shift toward leveraging public-private partnerships to enhance supply chain resilience, requiring contractors to align capabilities with government priorities in advanced defense technologies.
- Organizations should evaluate their positioning to participate in forthcoming solicitations that support long-term industrial base development and innovation in defense-related sectors.

**Jurisdictions:** federal
**Industries:** Defense & Military, Information Technology
**Topics:** Grants & Funding, Policy
**Published:** September 28, 2026

### Government Entities
- Department of Defense (DoD)
- Aerospace Industries Association (AIA)

### Vendors
- MP Materials (equity investment recipient)
- Palantir (defense tech startup)
- SpaceX (defense tech startup)

### Sources
- [As private investment in defense increases, some bottlenecks in funding: AIA-Bain - Breaking Defense](https://breakingdefense.com/2026/09/as-private-investment-in-defense-increases-some-bottlenecks-in-funding-aia-bain) - Breaking Defense