The world’s largest defence contractors have significantly increased their investments in military technology start-ups this year, driven by the need to keep pace with rapidly evolving warfare dynamics. Major companies such as Lockheed Martin and BAE Systems have collectively participated in venture capital funding rounds amounting to a record $4.1 billion so far in 2026, according to data from Dealroom.
This surge in investment reflects a strategic effort by established defence firms to integrate emerging technologies alongside traditional military platforms. Gwen Billon, a partner at investment bank PJT who focuses on aerospace and defence sectors, noted that recent conflicts have underscored the importance of combining legacy systems with innovative, disruptive capabilities. “New defence technologies are here to stay, and defence primes want to ensure they have exposure to these technologies,” she said.
The increased defence sector investment occurred amid a temporary pause in hostilities between the United States and Iran, which had been engaged in a tit-for-tat exchange of military strikes. After US attacks on Iranian targets late on Thursday, no air strikes were reported over the subsequent two nights, while Iranian forces refrained from assaults on American bases in the region since Friday.
The pause coincided with diplomatic efforts by an Omani delegation, which spent Friday and Saturday in Tehran seeking a provisional agreement to manage maritime traffic through the Strait of Hormuz. This strategic waterway has become a flashpoint in the conflict, with tensions rising over the movement of ships in the narrow passage.
US Ambassador to the United Nations Mike Waltz indicated that President Donald Trump was allowing space for these negotiations before deciding on future military actions. "Talks are ongoing. They’re happening at every level from the more technical aspect of it, all the way to the highest levels,” Waltz said.
According to briefings on the discussions, negotiators have focused on delineating how much commercial shipping should be routed via a southern corridor along the Omani coast, versus transit through Iranian territorial waters. The goal is to establish a framework permitting safe navigation through the strait while acknowledging the sovereignty of Oman and Iran.
However, Iranian officials, including a spokesperson named Baghai, stated that there had been no change in the status of traffic through the strait, which Iran had declared closed during the recent escalation. He confirmed that talks were continuing.
The current diplomatic effort builds on a memorandum of understanding signed on June 17 that extended a ceasefire by 60 days. Under that agreement, Iran agreed to gradually reopen the strait to shipping without imposing fees, while creating a platform for broader negotiations, including potential agreements on Iran’s nuclear program.
As the complex interplay of military tension and diplomatic dialogue continues to unfold, defence companies are simultaneously accelerating their push to develop advanced technologies that may shape the future of conflict.