19 startups advance in Pentagon's $1.1bn Drone Dominance competition

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Last month, the Defense Department wrapped up another round of the Drone Dominance competition, a $1.1 billion program aimed at strengthening the domestic drone industry to supply commercially developed drones to the military.

During the 12-day event at Camp Grayling, Michigan, 49 companies competed across multiple mission sets. Officials evaluated their small unmanned aircraft systems on performance, ease of use and each company’s ability to produce at scale. By the end, 19 companies advanced to the next round of testing, scheduled to begin in August.

The list of finalists offers a snapshot of the rapidly evolving defense drone industry. Nearly all are privately held companies focused on small UASs rather than traditional weapons. About half already have systems on the Defense Department’s Blue UAS Cleared or Blue UAS Select lists , making them easier for military units to purchase. Most are also relatively young: seven were founded within the past 13 years and eight within the past four.

To better understand why the field looks the way it does, Military Times spoke with J.R. Mullis, a retired Air Force contracting officer who founded the defense technology consultancy ellimaC Partners and Watchtower , a nonprofit that connects emerging defense technology companies with military organizations and hosts its own Best Drone Team Competition .

While many of the companies are young, Mullis said they are considerably “more mature” than the average drone startup. More importantly, they are developing technologies the military can field today.

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

Mullis said the finalists share less in common than many observers might assume. Rather than competing to build the same aircraft, many are developing different pieces of the same capability, from airframes and sensors to 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.”

Still, the dominance of younger companies reflects a broader shift in how the Pentagon acquires technology.

Mullis said the government has become more willing to identify operational gaps, giving entrepreneurs with specialized expertise an opportunity to build products that directly address military needs.

He pointed to one company competing in Drone Dominance, which he declined to identify by name, describing it as “one of the best ones” in the competition. Founded by what he called a “young founder” with deep technical expertise, the company grew from zero to millions of dollars in revenue in roughly two years by solving a specific problem.

One example from the list of qualifiers is Massachusetts-based Ascent AeroSystems, founded in 2014 by two brothers and a friend who originally set out to build a rugged drone small enough to fit inside a backpack during hiking and rock climbing trips.

The company later adapted its technology for military use and, in 2024, was acquired by California-based Robinson Helicopter, which later formed Robinson Unmanned. Today, Ascent’s Aero Spirit drone appears on the Defense Department’s Blue UAS Cleared list and the company has received more than $2 million in Defense Department contracts.

“Going back years and years, a lot of the defense-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.”

Manufacturing, not innovation, is the biggest hurdle

Coming up with a good idea is only part of the challenge. According to Mullis, the biggest obstacle facing small defense companies isn’t developing technology, but rather, producing enough of it.

A startup may successfully build a prototype, sell a handful of systems and convince the military it has a winning product. But when the government suddenly wants thousands, a small company or startup may lack the manufacturing capacity and capital needed to meet demand.

One example of how companies overcome that hurdle is the partnership between Georgia-based Kinetic Frames and Alabama-based Griffon Aerospace . Kinetic Frames is a relatively young company with a modest public presence — a simple website and Instagram page — while Griffon has received more than $400 million in federal contracts since 2009.

Together, the companies have produced and delivered more than 2,000 drones to the Defense Department, illustrating how smaller innovators can pair with established manufacturers to meet the military’s production demands.

“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.

Where defense giants fit in

At first glance, Drone Dominance appears to be dominated by startups, but Mullis said that doesn’t mean major defense contractors are ignoring the market.

Many of the industry’s largest “prime” contractors — companies that hold the government’s primary contracts — are already working on similar technologies through existing programs. Because those efforts are often backed by long-term government funding, he said, they don’t need the visibility that comes with participating in a public competition.

“The publicity matters for those small companies,” Mullis said. “It does not matter at all for those primes.”

That doesn’t mean established companies are absent from the competition, though.

Among the current finalists are publicly traded companies such as Kratos Defense & Security Solutions and Red Cat Holdings , both of which have built businesses around unmanned aircraft. Others represent partnerships between established defense manufacturers and newer drone developers, reflecting the increasingly collaborative nature of the market.

Mullis said acquisitions are often a natural outcome for successful startups, rewarding founders while helping proven technologies reach larger production scales.

“It’s good for the whole ecosystem because the founders are being rewarded for solving a problem,” he said, adding, “An acquisition is just an absolute success.”

Building the next generation of defense companies

Mullis said he thinks Drone Dominance is doing more than selecting companies for future contracts. He said the competition reflects a broader shift in defense acquisition by “encouraging and almost forcing collaboration.”

Earlier this year, the Defense Department announced the Drone Dominance Lethality Prize , which paired drone competitors with approved manufacturers capable of supplying standardized explosive payloads for one-way attack drones.

Even companies that fail to win contracts stand to benefit. “The best founders in the world wear failure like a badge of honor,” he said. “If you go to Drone Dominance, you get, if nothing else, real feedback on your technology.”

In an increasingly crowded drone market, that feedback should be considered valuable. “Even if they’re not selected, they’ll have their marching orders and they’ll know what to do to make it better,” Mullis said.