Lightspeed's Connor Love on the DOD budget reality, defense investing blind spots, and what kills the ecosystem

Summary

Connor Love leads national security and defense investing at Lightspeed Venture Partners, where he sits on the Frontier Tech team alongside Ravi Raj. He spent the better part of a decade in the military, including work directly under Pacific Command's four-star leadership, writing memos on hypersonics and space-based systems. That background shapes how he reads the defense tech market today — and where he thinks it breaks.

The continuing resolution opportunity

The budget chaos that most observers read as a headwind, Love reads as a sprint opportunity. A continuing resolution is normally a freeze — Congress kicks the can and spending stays flat. But the current CR was amended to allow new program starts, meaning money can be reallocated to new budget lines rather than just maintaining existing ones. Love says the tier-one founders and government insiders he talks to aren't tweeting about the confusion — they're calling their co-founders and moving fast. His prediction: by end of 2025, two or three companies will capture high hundreds of millions of dollars in in-year revenue through real production contracts, a scale he says has never happened under a CR before.

The mechanism matters. Savvy operators — he names Brian Haras, who came through SpaceX and is now at Castillon, as an example — are mapping each rescinded or reallocated budget line and approaching program offices directly. The argument is simple: if you don't need $90M for this line item, maybe you need $80M, and we have a product that fits.

The real kill risk: manufacturing, not capital

Love is direct about where the whole ecosystem fails. It isn't capital markets or acquisition timelines — it's production. The U.S. industrial base is hollowing out. He describes visiting machining shops in the Southern California desert: one-man operations, $7M businesses doing a single repetitive task, and those operators are dying off. If systems companies — the category he bets on — can't vertically integrate or build a long-tail supply chain capable of producing thousands of units rather than hundreds, the contracts won't renew and the bubble pops. He mentions Hadrian's Chris Power as a potential piece of the answer, but flags genuine uncertainty about whether SMBs can fill the gap in time.

Where to invest: systems companies, not pure science bets

Love frames the portfolio construction choice as a spectrum. At one end sits pure science and technology risk — if the physics don't work, there's nothing. At the other end sits software applied to government workflows, which carries almost no tech risk but not enough upside to return a venture fund. The sweet spot is systems companies: businesses with a real software layer, hard physics to solve, and a go-to-market flywheel that compounds as they add products. Andril is the reference case — its acquisition engine (AP, Grim, Bobc) takes existing technology and 10x or 100x-es it, then layers the next product on top of an already-credentialed customer relationship. He also cites Saronic, which is building autonomous surface vessels, as a company that can coexist with Andril's underwater autonomy work rather than compete with it head-on.

The failure mode he worries about in multi-company ecosystems is stovepiping: if companies build closed software infrastructure that can't talk to other autonomous systems, they create adversarial dynamics with Andril and the larger primes. In a world moving toward orchestrated autonomous systems operating together, interoperability is load-bearing.

How to think about growth metrics

Defense tech growth curves don't look like SaaS. Revenue starts with small SBIR grants — $2M to $5M R&D money — which Love discounts entirely when underwriting. Then there's a long flat period of iteration and de-risking. The inflection is a stepwise jump to a $200M–$400M production contract, often structured as an Other Transaction Authority deal rather than a true program of record. His job as an investor, he says, is to read technical progress closely enough to write a preemptive term sheet just before that contract lands — because once it does, the company has a base cash line that funds the next factory without burning more venture dollars.

The internal test he gives founders on whether to raise now: if you have genuine line of sight to a production contract and you don't raise capital today, you won't be able to deliver when you win. Companies that raise above $500M have a binary outcome — public company or private equity buyout — so founders need real conviction before crossing that threshold. His advice to those who have it is to take the swing.