Dual-use technology: Rewriting the rules of engagement

Introduction

Speak to anyone in Defense, and they’ll tell you that the risk level globally has never been higher. The face of warfare is mutating—as powerfully evidenced by the Russo-Ukrainian conflict.¹ Today’s new threat matrix has to be broadened to include cyber and space and broadened further still to incorporate economic and grid security.

At the same time, the very definition of what constitutes a “weapon” is being recalibrated. We know that a weapon is something that causes intentional harm, but it might not look like a gun or a bomb. Today, bits and bytes have superseded big red buttons and triggers—controlling everything from jammers and nuclear payloads to electricity and water systems. After all, power outages or a polluted water supply can be just as crippling as a bomb. And as the forms of weaponry have changed, so have the players that wield them, with the proliferation of private armies running sophisticated for-profit piracy operations.

Against this dynamic backdrop, Defense forces have been compelled to reassess both their weaponry and their strategies. Over the past couple of years, governments and alliances including the US, the UK, the EU, NATO and Australia have issued revised Defense strategies. All acknowledge the need to ramp up spending on Defense to address the morphing battlefield, and all share a common focus on the importance of dual-use technologies (DUT)—technologies that can be deployed for both civilian and military purposes.

DUT is viewed as critical to responding swiftly to emerging threats and introducing agility into lumbering bureaucracies that have struggled to innovate and reform fast enough in a changing world.

So Defense spending is increasing, and a growing portion of that budget will go to DUT. As a result, technology companies exploring all potential growth vectors to drive value for investors will increasingly find themselves considering dual-use applications—and the implications of having both civilian and military clients.²

This presents a growing and important investment opportunity for private markets. In particular, GPs specializing in technology investments across private equity and venture capital are increasingly addressing DUT and supporting founders in navigating this growing opportunity. 

¹  Russia’s full-scale invasion of Ukraine in February 2022 quickly destroyed or disabled a significant part of the country’s internet and communications networks. Illustrating the increasing importance of DUT, just two days into the conflict, President Zelenskyy requested that SpaceX activate its Starlink satellite internet service in Ukraine to replace these critical communications networks.

² OpenAI, the AI research and deployment company, announced in December 2024 that it will partner with a defense-tech company to help US and allied forces defend against drone attacks, a major pivot from OpenAI’s position just one year ago, when the company’s policies explicitly banned military use of its technology. About-faces like this are becoming increasingly common and present many ethical and operational challenges.