When Policy Meets Profit: How Washington’s Priorities Are Shaping Wall Street Returns
15 October 2025 - A Weekly Publication by New North Ventures
Emerging Tech Showcase: Space Innovation | 21 October @ 2:30PM EST
We’ve locked in three exceptional space startups that represent exactly what makes dual-use companies compelling—proven technology, real market traction, and applications that work across commercial and defense markets.
Next Tuesday, you’ll meet the founders behind Auriga Space, ThinkOrbital, and bluShift Aerospace. These companies are solving critical problems in space infrastructure and have navigated the NASA and DoD procurement gauntlet successfully. They’re building technologies that are in demand by both government and commercial customers, which is precisely where the most interesting opportunities emerge.
The space economy sits at an inflection point. Launch costs have dropped 95%. Government procurement is accelerating. The companies building the infrastructure layer right now will define the next decade of activity beyond Earth orbit.
If you’re tracking where defense innovation and commercial space intersect, this showcase is worth your time.
Seven unicorns went public in Q3 2025, and the defense tech world celebrated a long-awaited liquidity moment. Firefly Aerospace doubled its valuation in three months. Gemini and Netskope priced above their last rounds. The narrative wrote itself about the exit market finally reopening for dual-use companies.
Each successful listing combined federal policy alignment with commercial revenue execution. Firefly built commercial launch services that generated predictable cash flows before Space Force contracts arrived. The company went public on the strength of diversified aerospace revenue that investors could model with traditional multiples, then benefited from defense modernization budgets as upside. Gemini timed its listing to the GENIUS Act passage, which removed regulatory uncertainty that had paralyzed crypto infrastructure investment. Netskope established enterprise cybersecurity revenue across Fortune 500 customers, proving product-market fit in commercial environments before layering federal sales as a growth driver rather than a core thesis.
Compare those outcomes to biotech, where listings fell from 22 in 2024 to just 8 this year. The companies possessed comparable technical quality and venture backing. Drug pricing pressure and regulatory rhetoric eliminated public market appetite regardless of clinical progress. The policy environment determined access to liquidity.
Strategic M&A activity tells a similar story through acquisition structure. Seventy-five percent of transactions occurred at Series A or earlier stages as buyers shifted from purchasing growth trajectories to acquiring deployed capabilities. Salesforce paid $2.1B for AI workflow tools already processing enterprise data. OpenAI spent $1.1B on shipping analytics infrastructure. Grammarly acquired operational email productivity features serving paying customers. Buyers paid for what companies had built and deployed, not what they promised to build, but did so before exponential growth.
Policy tailwinds in space, cybersecurity, and autonomy establish necessary conditions for exits. Space Force modernization budgets, federal zero-trust mandates, and defense procurement acceleration provide revenue visibility that public markets can underwrite and have confidence in. The $74.5B in Q3 exits and strong post-IPO performance prove investor appetite exists when these conditions align.
Commercial execution provides the sufficient condition. Policy alignment opens the exit window, but companies still must demonstrate unit economics and product-market fit that justify valuations beyond speculative multiples. The successful exits combined both elements rather than relying on either alone.
The investment implication matters for early-stage positioning. Companies building today benefit from tailwinds that will mature over 24 to 36 month development cycles. Federal appropriations in these sectors increased through FY2026 budgets. Regulatory frameworks continue clarifying rather than restricting. Strategic buyers demonstrate acquisition appetite for operational capabilities.
Fundraising metrics reinforce selective deployment rather than capital scarcity. Dry powder reached $311B while year-to-date fundraising totaled $45.7B, creating apparent tension. The capital exists and concentrates in sectors with policy support and commercial validation paths. Companies threading both needles raised follow-on rounds and attracted exit interest. Companies lacking either dimension faced extended private periods.
The H1 2026 listing calendar will test whether Q3 represented sustainable momentum or temporary opportunity. The underlying conditions appear durable. Strategic buyers continue seeking capabilities in policy-aligned sectors. Public markets reward profitability and mission relevance over growth narratives.
Early-stage investors backing companies in the right sectors with commercial-first execution strategies benefit from both policy tailwinds and validated exit paths. The window exists and the data confirms which companies can access it.
Economics Nobel Prize awarded for explaining innovation-driven growth
The 2025 Nobel Prize in Economics went to Joel Mokyr, Philippe Aghion, and Peter Howitt for explaining how innovation and its underlying forces drive sustained economic growth. The award recognizes work that directly addresses questions central to dual-use technology investment and defense innovation.
Mokyr, an economic historian at Northwestern, won half the prize for identifying why growth accelerated permanently only after the Enlightenment and Industrial Revolution. He pinpointed three prerequisites for sustained growth. Joint evolution of science and technology allowed people to understand why things worked. Mechanical competence enabled practical application. Societies remained open to disruptive change. Earlier civilizations achieved breakthrough innovations, but growth spurts remained temporary because these conditions did not align.
Aghion and Howitt developed the theory of sustained growth through creative destruction, constructing a mathematical model of how companies invest in new processes and products that outcompete predecessors. Their 1992 framework shows that innovation-driven growth operates through continuous displacement. Companies invest in R&D, develop superior offerings, capture market share, and then face displacement themselves by the next wave of innovators. The model explains why breakthrough capabilities emerge from competitive ecosystems rather than protected markets.
The laureates’ work demonstrates that continued growth requires specific structural conditions. Competitive markets must allow new entrants to challenge incumbents. Academic freedom enables fundamental research. Societies must remain open to disruptive change. At the press conference following the announcement, Aghion warned that inappropriate competition policy could allow dominant firms to squeeze out rivals despite AI’s growth potential. He also noted the widening technological gap between US and Chinese leadership and incremental European innovation.
The framework connects directly to defense technology development. The structural conditions that produce sustained economic growth increasingly matter for national security capabilities. Breakthrough dual-use technologies emerge from the same competitive, open innovation ecosystems that drive commercial advancement rather than from isolated defense contractors operating in protected markets.
More links to explore:
HavocAI raised $85 million this week to scale its maritime autonomy capabilities across vessel classes ranging from 14-foot swarming unmanned surface vehicles to 100-foot autonomous ships. The round included B Capital, In-Q-Tel, Lockheed Martin, Taiwania, and Vanderbilt University.
The company moved from concept to live deployments in just over a year. The technology delivers operational value in real maritime environments rather than controlled demonstrations, which explains why military and international partners continue expanding their use of the platform. The investor syndicate reflects the strategic importance of advanced maritime autonomy for national security and allied defense capabilities.
The trajectory from prototype to production deployment in twelve months demonstrates what dual-use companies can achieve when technical capability meets operational discipline. Maritime autonomy represents a critical capability gap that few companies are filling with technology that works in contested environments. As early investors in HavocAI, we’re excited to watch the team execute at a pace that continues to reinforce our investment decision.
In this episode of Securing Our Future, host Jeremy Hitchock sits down with Sharon Weinberger, National Security and Foreign Policy Editor at The Wall Street Journal and author of “The Imagineers of War: The Untold Story DARPA, the Pentagon Agency that Changed the World.” Sharon shares her professional journey and insights on DARPA—a key player in technological advancements for national security. From DARPA’s role in developing the internet and stealth aircraft to its controversial projects like the Vietnam-era ‘Hafnium Bomb,’ Sharon delves into how DARPA’s missions have evolved over time. She also discusses the challenges of balancing high-risk projects with tangible payoffs and how DARPA can continue to stay relevant amidst growing private sector innovation. Listen in as we explore the future of national security innovation and the lessons learned from DARPA’s storied history.
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