Liquidity, Platforms and Defense Investments
This week, aerospace parts maker Arxis announced plans to go public at a valuation north of $11 billion, according to Reuters. While one IPO does not make a market, other defense companies including AEVEX and Elment, have also filed for IPOs. Taken together, these filings show the exit window for defense-related companies continues to be strong.
For the past several years, capital has poured into defense tech and national security startups at unprecedented levels—$29B in 2024, roughly 3x from 2020 levels. During that same period, all investors have quietly wrestled with a core concern: DPI. Without clear, repeatable exit pathways—whether through IPOs, scaled M&A, or more recently in the secondary market—allocators are fretting how and when that capital ultimately returns. The Arxis deal is is a good signal that the apex liquidity event—an IPO (without a SPAC, even!) is still happening.
The convergence of geopolitics, policy, and market demand are all pointing towards secular tailwinds for the defense sector. Governments are spending aggressively on modernization, supply chains are being reshored, and defense capabilities are becoming more software-defined. Public market investors are increasingly viewing defense as a durable growth category tied to long-term national priorities. That shift in perception is critical, as it expands the buyer base for venture-backed companies beyond traditional strategics, further buoying the IPO pipeline.
Interestingly, Arxis is following a familiar playbook—that of the ‘platform’ company. Beyond Arxis, Voyager Space and Redwire are also recent IPOs that were built through aggressive acquisition strategies to create vertically integrated capabilities before listing. Voyager, for example, assembled a multi-entity space infrastructure platform through a series of acquisitions spanning launch, in-orbit services, and defense systems prior to its IPO . Redwire followed a comparable path earlier via a SPAC, consolidating niche space technologies into a single scaled entity. More broadly, recent listings like Karman Holdings and Firefly Aerospace also reflect variations of this model, where companies aggregate mission-critical capabilities and government contracts to present a more mature, “public-ready” platform rather than a single-product business . Taken together, these IPOs suggest that in national security, scale through acquisition—not organic growth alone—is increasingly the prerequisite for accessing public market liquidity. Veteran Ventures is pleased to share that we’re keenly aware of this market dynamic, and use it in our investment thesis to expand our pathways to liquidity for our investors.
The IPO market still faces structural headwinds, but the Arxis IPO is a healthy signal that the defense market enjoys a repeatable playbook that builds good companies, provides healthy returns, and supports national security in a meaningful way. This trifecta is a win for founders, a win for investors, and a win for the US.