Forgot Your Password?

New to The Nation? Subscribe

Print subscriber? Activate your online access

.nation-small__b{fill:#fff;}

How Silicon Valley and Private Finance Are Reshaping War

Revealing the dangerous alliance of techno-fascists with finance capital and the military industrial complex.

When Smedley Butler said, “War is a racket,” he couldn’t have imagined that a sitting US president would time announcements about major military operations in order to manipulate the stock market. But as the US economy has been increasingly financialized, so too has the nature of war profiteering, increasingly driven by insider trading, oil speculators, and the portfolio earnings of venture capital (VC) investors, tech billionaires, and private-equity fund managers. Of course, finance has always played a role in US war-making: JPMorgan was investigated by the Nye Committee inquiry into World War I profiteering, and private capital flooded into Silicon Valley on the heels of DOD investment into early microwave weapons and semiconductors. But facing a new era of high interest rates, fallout from a decade of bad lending based on fictional credit documentation, and a liquidity crisis driven by fewer IPOs, private capital is increasingly desperate to restore its previous era of high returns. The surest avenue for this restoration is the capture of the Pentagon budget, recently proposed by Trump at $1.5 trillion.

To access this giant slush fund, private capital has launched an unprecedented effort to capture key posts in the military establishment, rewrite the Pentagon’s vast regulatory and development bureaucracy, and embed its priorities within the military branches themselves.

At the level of personnel, the presence of VC and private equity (PE) is dramatic. The new chairman of the Joint Chiefs of Staff—the highest-ranking military officer in the United States—is Dan Caine, a long-term investor who became a venture capitalist and adviser for Shield Capital and Thrive Capital, two funds with substantial investments in weapons start-ups. Stephen Feinberg, the US deputy secretary of defense, is the cofounder of Cerberus Capital, a $70 billion global investment firm that launched a VC arm in 2024 which is currently headed by an alum of In-Q-Tel, the CIA’s venture capital arm. Dan Driscoll, the secretary of the Army had a career in private equity and venture capital before his appointment and has vowed to apply the Silicon Valley model to the Army. Michael Obadal, the under-secretary of the Army, is a former senior director at Anduril, which was launched by venture capital investment. John Phelan, a prominent private-equity investor and former CEO of MSD Capital, briefly served as secretary of the Navy before being forced out during the ongoing Naval blockade of Iran. Two officials in Trump’s Office of Management & Budget with direct influence over military spending have substantial interests in VC-backed weapons firm Anduril and have characterized their roles as promoting the inclusion of military tech into the DOD. The new appointees to the President’s Council of Advisors on Science and Technology, which the White House hailed as “luminaries in science and technology,” is populated by a list of billionaires and their hangers-on, including co-chairs David Sacks and Michael Kratsios (Peter Thiel’s former chief of staff) and tech tycoons like Marc Andreesen, Larry Ellison, and Jensen Huang. The Trump administration has also invited in as advisers on military priorities longtime investors like Joe Lonsdale (cofounder of Palantir and 8VC, a venture capital firm focused on military tech) and Trae Stephens, the chairman of Anduril and partner in Peter Thiel’s VC firm Founders Fund, which is also heavily focused on investments in military tech. This is not to mention the direct involvement of Trump’s family, including his sons and son-in-law as advisers and partners in military start-ups and private-equity funds.

But personnel is only part of this equation: There has also been a massive expansion of bureaucratic infrastructure designed to incorporate VC and PE priorities into the military establishment. Key among these are initiatives like Trump’s Economic Defense Unit, the Biden-era Office of Strategic Capital (OSC) and Small Business Investment Company Critical Technologies Initiative (SBICCT)—a joint initiative of the OSC and the Small Business Administration—and DARPA’s Commercial Strategy Office, launched in 2019. In late 2024 the OSC distributed $2.8 billion to a number of private funds investing in military technologies.

As of December 2024, those loan recipients included America’s Frontier Fund, backed by Peter Thiel and former Google CEO (and drone investor) Eric Schmidt; Moonshots Capital (founded by Kelly Perdew, winner of Season 2 of The Apprentice and former executive vice president at the Trump Organization); Snowpoint Ventures (founded and managed by a number of Palantir alums); and RidgeLine Ventures, part of Anthony Blinken’s firm WestExec. Then in 2025, after Trump was inaugurated, OSC made a number of additional investments (not all of which have been disclosed). Funds get access to up to $150 million in Pentagon cash, but must raise an additional $120 million from private sources.

In addition to the provision of loans and high-ranking Pentagon posts, the broader DOD bureaucracy and the individual service branches are getting a private-finance makeover with the addition and expansion of VC units and tech incubators. The DOD’s Defense Innovation Unit was the earliest such initiative, formed in 2015 in Mountain View California and designed to bridge the gap between Silicon Valley’s commercial tech industry and DOD weapons development priorities; it was elevated in 2023 with direct report access to the secretary of defense. Since then there has been a barrage of additional access points created within the DOD: There’s the National Geospatial-Intelligence Agency’s Outpost Valley; the US Army’s OnPoint Technologies, Venture Capital Corporation, Executive Innovation Corps, and ArmyFuze, a partnership with Silicon Valley’s biggest incubator Y Combinator; the Department of Homeland Security’s Silicon Valley Innovation Program; the Navy’s NavalX Tech Bridge (an international network of tech hubs); the Crucible Accelerator, designed to help start-ups “cultivate strategic partnerships in the Department of Defense ecosystem”; the Air Force’s AFWERX, and the Marine Innovation Unit (a reserve unit for “tech whizzes and CEOs”). There’s also the Chief Digital & Artificial........

© The Nation