October, 2025

Models for technological developments financing in the field of national security

In international practice, the development of technologies in the field of national security and defense is financed both by government programs and by private investors, including the largest corporations.

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The development of dual-use and military technologies is carried out through state and private sector financing of basic scientific research and advanced developments

Scientific research in the military sphere should be considered in conjunction with scientific activities in general, the financing of which by the state is aimed at "warming up" the general research field and maintaining significant scientific potential in the country. New technologies in the defense industry are created on the basis of basic (fundamental) scientific research, which is funded mainly on a non-refundable basis (grants), and applied developments, which are also funded on a return basis (venture capital investments, including from large corporations).

A key element of the functioning and development of the venture industry and the innovation environment as a whole is the targeted financing of scientific research carried out by the state on an irrevocable basis

In the United States, the amount of government funding for science from the federal budget on an irrevocable basis (research grants) provided through executive authorities is comparable to the size of the venture capital market. At the same time, the US venture capital market exceeds the total volume of venture capital markets in all other countries.

The relevant executive authorities are the main managers of funds allocated by the state to finance scientific research

The main expenses for scientific research in the United States are carried out from the federal budget through the structures of the executive branch. The Pentagon is the largest steward of government spending on science from the federal budget. Other major government agencies that direct funds to scientific research are the Ministry of Health, the Ministry of Energy, NASA, and others.

Investment funds for investments in venture capital companies owned by leading defense industry corporations play an important role in the development of innovations in dual-use and military technologies

A significant amount of venture capital investments in military developments are carried out directly by the largest corporations operating in the defense industry sector through corporate venture funds. There are also successful specialized funds created with the support of government agencies and aimed at investing in military and intelligence developments.

Authors
of the study

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Sergey Safonov

Partner

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