This story was crafted in response to a trending article posted to TechCrunch on January 26, 2025: “2025 will likely be another brutal year of failed startups, data suggests,” by journalist Mary Ann Azevedo. View article here.
Mary Ann Azevedo’s TechCrunch article paints a sobering picture of the startup landscape heading into 2025, highlighting an increase in closures, particularly among companies that emerged during the frenzied funding years of 2020 and 2021. While the statistics shared are compelling, they reflect a narrow slice of the startup ecosystem and overlook a critical segment of ventures thriving despite macroeconomic challenges—those focused on dual-use and defense technologies.
At Rushlight Ventures, we specialize in the commercialization of federally sponsored research and defense-related intellectual property. Unlike many of the startups affected by unsustainable valuations or market misalignment, we see a different narrative playing out in our portfolio. Here’s why we believe 2025 could mark a year of resilience and innovation for startups in the defense and dual-use space.
Long-Term Viability over Short-Term Hype
Many startups that failed in recent years fell victim to an overemphasis on growth-at-all-costs mentalities, as noted in Azevedo’s piece. These companies prioritized rapid scaling without establishing sustainable business fundamentals, leading to a collapse when funding dried up.
Defense and dual-use startups, by contrast, operate within a more measured and long-term funding ecosystem. With federal research grants, SBIR (Small Business Innovation Research) contracts, and other government programs, these companies are not chasing unsustainable growth metrics. Instead, they’re focused on solving critical, tangible problems with solutions that have clear market and mission alignment.
At Rushlight Ventures, we partner with small and mid-sized businesses to turn federally funded R&D into viable, market-driven products. This approach emphasizes disciplined spending and gradual scaling—an antidote to the “burn fast, grow fast” ethos that has characterized many of the recent closures.
Mission-Critical Markets Don’t Shut Down
While Azevedo notes that shutdowns spanned industries, defense, aerospace, and other mission-critical markets remain far more insulated from economic downturns. As global tensions persist and governments prioritize technological superiority, the demand for innovative solutions in these fields only grows.
Rushlight Ventures’ portfolio includes companies in electric aviation, advanced materials, life sciences, and green energy—all areas that address urgent, ongoing needs. For example, our affiliate Lectratek is pushing the boundaries of electric aviation, an industry with significant government and private sector support due to its implications for national security, sustainability, and innovation. Lectratek is doing this not by offering yet another duplicative electric aircraft platform, but by developing electric aviation-grade critical powertrain components and subsystems that enable electric and hybrid-electric aviation vehicles to “grow up” as they move from proof of concept to production vehicles.
Unlike consumer-focused sectors, where demand can waver with market conditions, defense and dual-use technologies are backed by consistent, mission-driven funding streams. These markets are not just surviving—they’re thriving.
Experienced Leadership Matters
One of the underlying issues raised in the TechCrunch article is the influx of inexperienced founders during the pandemic-era funding boom. Many received funding prematurely, lacking the operational expertise to navigate the complexities of scaling a business.
Rushlight Ventures takes a different approach. Led by seasoned professionals with decades of experience in defense, aerospace, and dual-use markets, we work closely with startups to ensure they are ready to succeed. Our team’s deep expertise in technology transition, licensing, financing, and mergers and acquisitions equips startups with the tools they need to thrive, even in challenging economic climates.
A Bright Spot Amid the Headlines
It’s easy to focus on the grim statistics of startup closures. But it’s important to remember that the failures of 2024 and 2025 are not reflective of the entire entrepreneurial landscape. Defense and dual-use startups operate in a different reality, one where careful planning, strategic partnerships, and mission alignment drive long-term success.
As Azevedo’s article acknowledges, “Not all startups are washed out.” At Rushlight Ventures, we see that firsthand every day. Startups grounded in solving real-world problems with proven technology have the potential to thrive, even as others falter.
The challenges of the last few years may indeed continue into 2025 for some sectors. But for those in mission-critical markets with strong fundamentals, the future is bright. The data doesn’t tell the whole story—and the success of our portfolio proves it.
In a time of uncertainty, we invite founders, investors, and stakeholders to rethink the startup narrative. The key to resilience lies not in chasing trends but in building solutions that matter. If 2025 will be remembered for anything, it should be for the enduring impact of startups that prioritized substance over flash. At Rushlight Ventures, we’re proud to be part of that story.