Defence power is no longer defined by platforms alone. It’s shaped upstream, by capital allocation, ownership rules and the speed at which states can convert technology into deployable capability.
That shift is already underway. Many governments recognise it. Some have redesigned their systems around it. Australia is still adapting, albeit slowly, to a reality that no longer tolerates delay and inertia.
When I spoke with James Tennant, Partner – JAPAC at BOKA Capital, his belief is that capital has re-entered the geopolitical arena.
Across major financial and political centres, capital is no longer treated as neutral. It is being actively aligned with national objectives that include economic security, industrial resilience and defence readiness.
“Even those three financial hubs, you can feel that capital has become geopolitical again,” Tennant says. “It’s not just financial. In London, post Ukraine, post Brexit, people are talking about economic security.”
The United States has formalised this shift by integrating private capital directly into defence and dual use priorities. The United Kingdom is embedding venture expertise inside defence decision making. Sovereign wealth is no longer passive, it is directional, intentional, and increasingly tied to national strategy.
This represents a structural change, not just a trend. States that fail to adapt will find themselves dependent on systems they neither control nor fully understand.
AI dominates defence investment narratives, but the signal-to-noise ratio is deteriorating.
“AI is really the big buzz at the moment,” Tennant says, and as a result that buzz is distorting capital discipline.
Defence capability demands reliability, endurance, and operational relevance. Hype does not survive procurement cycles. Long timelines expose weak assumptions, unproven claims, and products that were never fit for deployment.
“Not all defence technology is good technology,” Tennant commented.
That reality can be uncomfortable, particularly for Founders and investors raised on growth narratives, but defence does not reward optimism. It rewards suitability and stamina.
“Sometimes the answer is no, and it’s a hard pill to swallow, but you have to figure that out fast and move on,” added Mr Tennant.
Grants, pilots, and press releases create motion. They do not create capability. When technology fails to convert into contracts, the issue is rarely awareness, it is fit.
Australia’s limitation is not talent. It is alignment.
“It’s definitely not a talent thing,” Tennant says. “The choke point is really around capital doctrine and institutional plumbing.”
The country produces strong research and capable founders, but the systems surrounding them remain mismatched to defence realities. Venture timelines do not align with decade long procurement cycles. Short-term capital expectations collide with long-term national capability needs.
“We rely heavily on grants, pilots, and traditional VC, which is structurally mismatched for long-term defence sales cycles,” Tennant adds.
Recent initiatives signal intent, but intent does not close structural gaps. As a result, promising technology stalls before it scales.
International expansion compounds the problem. Each allied market introduces its own regulatory rules, ownership constraints and specific procurement barriers.
“There’s not one single playbook per country,” Tennant warns. “Local partners… to navigate that is going to be super important.”
Companies that underestimate this complexity do not fail loudly. They stall quietly, often trapped between compliance, capital constraints and incompatible procurement systems.
What is emerging now goes beyond defence technology. It is economic statecraft.
States are increasingly using financial mechanisms, ownership rules, data controls, capital access, industrial policy as instruments of power. These are not secondary tools. They shape supply chains, dictate resilience and determine who can operate at scale.
“We’re moving into an environment where… the capital stack is as much as weapon as, sort of, for structure,” Tennant says.
Over the next decade, control of funding pathways, regulatory leverage and investment conditions will matter as much as physical capability. Financial architecture is becoming part of national defence.
The future of defence capability will not be decided by innovation slogans or funding announcements. It will be decided by systems, which includes the ability to identify viable technology, sustain it through long timelines and integrate it without fragmentation or impatience.
Australia stands at a decision point. The talent exists. What remains unresolved is whether the institutions, capital frameworks, and governance structures are prepared to operate at the velocity and scale the environment now demands.
