JPMorgan Chase has accelerated its investment in defense and critical-technology startups through its Security and Resiliency Initiative, supporting companies in advanced manufacturing and hypersonic technology. The bank is also financing strategic industry projects, marking a renewed focus on direct startup investment. However, rising defense-tech valuations and limited disclosure of holdings raise concerns about investment risks and market concentration.
JPMorgan Puts $5 Billion Into Defense Startups in the First Year of Its Security Push
JPMorgan announced on October 19 that its Strategic Investment Group had committed $5 billion of the initiative’s initial $10 billion equity allocation in the first year, a faster pace than the bank expected. The group, led by Todd Combs, a former Berkshire Hathaway investment manager who joined in January 2026, invests in venture, growth, and later-stage companies, and recent investments cover defense technology, distributed battery storage, automated manufacturing, and frontier technologies. Co-president Doug Petno, who oversees the overall initiative, the bank could expand the program beyond the original $10 billion. Most holdings have not been disclosed, and two known stakes stand out.
Hadrian builds automated factories that make parts for defense, aerospace, and maritime customers, and its founder says a California plant runs with 10 robots for every human employee. It raised $1.37 billion in a Series D at a $7.87 billion valuation in August, up from about $1.6 billion in January, with JPMorgan helping to lead the round, and its Opus software is already used by the US Army and Navy. Castelion, founded in late 2022 by former SpaceX engineers, raised $1 billion in a Series C at a $13 billion valuation in August, co-led by JPMorgan’s Strategic Investment Group, Andreessen Horowitz, and Carlyle, to scale production of its low-cost Blackbeard hypersonic strike missile. The Navy has become its main military customer, awarding about $50 million in February and about $105 million in April for integration on the F/A-18E/F Super Hornet.
The wider initiative is large. JPMorgan launched it in October 2025 with a goal of directing $1.5 trillion to industries tied to US economic security over ten years, and it says it financed or facilitated more than $230 billion in year one across five focus areas: supply chain and advanced manufacturing, defense and aerospace, energy independence and resilience, frontier and strategic technologies, and pharma and healthtech. Examples include Korea Zinc’s $7.4 billion smelter in Tennessee, the initial public offering of geothermal developer Fervo Energy, and debt financing for Drax Group’s purchase of Bluefield Solar Income Fund. The first-year financing equals about 15% of the ten-year target, against 10% at an even pace, and CEO Jamie Dimon has said the total could end up far bigger and is 100% commercial.
The equity push is a change of direction. JPMorgan stepped away from direct stakes in growth companies in 2014 when it spun off One Equity Partners, and until this program it mostly acted as lender and adviser. The bank cites concerns about supply chains, including heavy reliance on China for critical minerals, and wars in Ukraine and the Middle East as reasons to back US-based manufacturers.
Global Supersonic and Hypersonic Weapons Market USD 17.23 Billion in 2025, approximately USD 57.19 Billion by 2035, representing an estimated CAGR of 12.75% from 2026 to 2035.
Why Is a Bank Investing Directly in Defense Technology?
Several factors explain the strategy.
First, supply-chain security. The initiative is designed to identify vulnerable supply chains and underfunded chokepoints in missiles, critical minerals, precision parts, and advanced manufacturing, and to connect them with financing and equity.
Second, a capital gap. Factories, suppliers, and production lines need large amounts of capital before government orders scale, and venture-backed firms such as Hadrian and Castelion now raise rounds of $1 billion or more.
Third, policy and demand. Defense tech rounds have been fueled by the administration’s push to reindustrialize the US.
Finally, client relationships. Equity stakes can also deepen the bank’s ties to fast-growing companies that will later need lending, advisory work, and public-market access, a point analysts have raised about the program.
Market statistics
- The global supersonic and hypersonic weapons market is projected to grow from USD 17.23 billion in 2025 to USD 57.19 billion by 2035, at a 12.75% CAGR (Spherical Insights).
- JPMorgan deployed $5 billion of equity in year one, 50% of its initial $10 billion allocation, and financed or facilitated more than $230 billion, or about 15% of its $1.5 trillion target.
- Hadrian raised $1.37 billion at $7.87 billion in August, up from about $1.6 billion in January, and Castelion raised $1 billion at $13 billion.
- Peer defense-tech valuations in 2026 include Anduril at $61 billion, Shield AI at $12.7 billion, Saronic at about $9 billion, and Quantum Systems at $8 billion.
- The Navy awarded Castelion about $50 million in February and about $105 million in April for Blackbeard development and F/A-18E/F integration.
Major Developments Shaping Defense-Tech Investment in 2026
- JPMorgan Reports $5 Billion Deployed in Year One
On October 19, the bank said its equity investments were halfway to the initial $10 billion target and could grow beyond it, and that it had financed or facilitated more than $230 billion of transactions.
- Hadrian Raises $1.37 Billion at a $7.87 Billion Valuation
The August round, co-led by JPMorgan and Baillie Gifford, nearly quintupled the company’s valuation from January and will fund hiring and its Opus factory software.
- Castelion Raises $1 Billion at a $13 Billion Valuation
The August 19 round will expand manufacturing capacity for Blackbeard, speed development of a longer-range strike weapon, and build defensive systems for air and missile defense, with production planned at a New Mexico facility.
- $230 Billion Is Financed Across Five Focus Areas
The year-one total spans defense and aerospace, energy, critical minerals, and technology, and the team of more than 35 bankers has been expanded to cover Canada and Europe.
- Defense-Tech Valuations Surge Across the Sector
Anduril more than doubled its valuation to $61 billion in a $5 billion round in May, Shield AI raised $2 billion at $12.7 billion in March, and Germany’s Quantum Systems raised $1.2 billion at $8 billion in July.
What Risks Could Affect JPMorgan’s Defense Bets?
The strategy carries several risks.
- Valuation and Bubble Risk: Hadrian’s valuation rose nearly fivefold in under eight months, and commentators have asked whether defense-tech funding is forming a bubble, particularly around hypersonics, AI, and dual-use manufacturing.
- Limited Disclosure: CNBC notes that most of the $5 billion has not been disclosed, so outside observers can see only two of the stakes.
- Production and Technology Risk: Castelion has not announced production volumes or delivery schedules, and scaling a new missile from prototype to industrial output is difficult.
- Customer Concentration: The Navy is Castelion’s primary military customer, so program funding and procurement decisions matter heavily.
- Role and Risk for a Bank: JPMorgan exited direct startup investing in 2014 because such stakes are risky, and equity is only about 2% of the roughly $235 billion deployed, based on our calculation, so returns will depend on a small number of positions.
Strategies to Manage Risks in JPMorgan’s Defense Investments
- Valuation and Bubble Risk: Conduct independent valuations, assess companies’ long-term revenue potential, and avoid overpaying for fast-growing defense startups.
- Limited Disclosure: Improve transparency by publishing clearer investment updates and providing regular progress reports.
- Production and Technology Risk: Monitor product testing, manufacturing readiness, delivery milestones, and technical performance before expanding investments.
- Customer Concentration: Encourage startups to diversify their customer base across military branches and allied defense markets.
- Role and Risk for a Bank: Maintain disciplined investment limits, diversify equity holdings, and regularly review risk-adjusted returns.
How Will Different Industries Be Affected?
- Defense Primes and Contractors
Well-funded startups such as Castelion and Hadrian are becoming suppliers and competitors to established primes, adding pressure on cost and delivery speed.
- Advanced Manufacturing and Robotics
Automated factories that make precision parts show a path to faster US production, with Hadrian’s plant using 10 robots for each human employee.
- Hypersonics, Missiles, and Munitions
Low-cost, mass-producible hypersonic weapons could change procurement economics, with Spherical Insights projecting the market to reach $57.19 billion by 2035.
- Banks and Investment Firms
Large banks are moving into direct equity in strategic industries, which could draw in other financial institutions and raise competition for deals.
- Critical Minerals and Energy Supply Chains
Financing for projects such as the Korea Zinc smelter, Fervo’s IPO, and early investments like Perpetua Resources’ antimony project show demand for domestic materials and power.
Opportunities Created by the Defense-Tech Investment Wave
Rising private capital in defense and supply chains is creating opportunities in:
- Automated and AI-enabled factories
- Low-cost hypersonic and precision-strike systems
- Air and missile defense technology
- Critical minerals processing and smelting
- Distributed energy and battery storage
- Robotics, machining, and precision-parts suppliers
- Defense-focused venture and growth funds
- Structured financing for production capacity
The defense industrial base is moving from a few large primes to a mix of primes and venture-backed manufacturers. Companies that can deliver production at scale, predictable costs, and secure supply chains are likely to attract the most capital.
Conclusion
JPMorgan’s first $5 billion of defense and security investments shows how quickly capital is moving toward automated manufacturing and low-cost weapons, with Hadrian at $7.87 billion and Castelion at $13 billion after August rounds. The bank has also financed or facilitated more than $230 billion and says the equity program could exceed its $10 billion plan. In the near term, results will depend on whether portfolio companies hit production milestones, whether more investments are disclosed, and whether defense-tech valuations hold as the sector draws record funding. If production scales and government demand continues, the program could help rebuild US supply chains, and if valuations fall or contracts slow, the equity portfolio may become a source of risk for the bank.
