Pentagon drone competition highlights rise of agile startups

The Pentagon’s $1.1 billion Drone Dominance programme is highlighting a rapidly changing defence industry in which young, specialised companies are increasingly developing battlefield-ready drone technologies, while manufacturing capacity remains one of the biggest obstacles to meeting military demand.

According to DefenseNews, 49 companies competed during a 12-day competition at Camp Grayling, Michigan, with their small unmanned aircraft systems evaluated for performance, ease of use, and their ability to produce at scale. Nineteen companies advanced to the next phase of testing, scheduled to begin in August.

The finalists offer a snapshot of the evolving U.S. defence-drone sector. Nearly all are privately held companies focused on small unmanned aircraft rather than traditional weapons systems. About half already have products listed on the Defence Department’s Blue UAS Cleared or Blue UAS Select lists, which makes it easier for military units to purchase their systems.

Many of the companies are also relatively young. DefenseNews noted that seven were founded within the past 13 years, while eight were established within the past four years.

J.R. Mullis, a retired Air Force contracting officer and founder of defence technology consultancy ellimaC Partners and nonprofit Watchtower, told DefenseNews that the companies participating in the competition are considerably “more mature” than the average drone startup.

More importantly, he said, many are developing technologies that the military can deploy immediately.

“I mean, they’re able to be deployed right now,” he said.

Mullis also argued that the finalists are not simply competing to build identical aircraft. Instead, many are developing different elements of a broader capability, including airframes, sensors, and autonomy software.

“If you were to circle all of them and mash them together,” he said, “I think it would make a really good capability.”

The growing presence of young companies reflects a broader shift in defence acquisition. Mullis said the government is increasingly identifying specific operational gaps, allowing entrepreneurs with specialized expertise to develop technologies aimed directly at military requirements.

One example is Massachusetts-based Ascent AeroSystems, founded in 2014 by two brothers and a friend who initially sought to develop a rugged drone small enough to carry during hiking and rock-climbing trips. The company later adapted its technology for military use and was acquired in 2024 by California-based Robinson Helicopter, which subsequently formed Robinson Unmanned.

The company’s Aero Spirit drone is now on the Defence Department’s Blue UAS Cleared list, while Ascent has received more than $2 million in Defence Department contracts.

“Going back years and years, a lot of the defence-tech founders were developing technology based on headlines,” Mullis said. “As the government is more open about what its capability gaps are, the real experts are able to put their hands up and build solutions for it.”

However, innovation is only one part of the challenge. Mullis identified manufacturing capacity as the biggest hurdle facing small defence companies. Startups may successfully develop prototypes and win military interest, but often lack the capital and production capacity needed when demand suddenly rises to thousands of systems.

The partnership between Georgia-based Kinetic Frames and Alabama-based Griffon Aerospace illustrates one solution. Together, the companies have produced and delivered more than 2,000 drones to the Defence Department.

“Scaling in order to meet the needs of the government is, I would say, one of the valleys of death [for a small company],” Mullis added.

DefenseNews also noted that major defence contractors remain active in the sector, although they may have less need for the publicity generated by competitions. Among the finalists are Kratos Defence & Security Solutions and Red Cat Holdings, while other entrants represent partnerships between established manufacturers and emerging drone developers.

For Mullis, the competition reflects a wider transformation in defence acquisition, encouraging collaboration and helping companies improve even when they do not win contracts.

“The best founders in the world wear failure like a badge of honor,” he said.

As the U.S. seeks to expand its domestic drone industry, the competition underscores a central challenge: turning promising technology into large-scale production quickly enough to meet military demand.

By Sabina Mammadli