⛵ Dhow Dispatch │ The Privatization of Killing

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🚀 | TL;DR

Silicon Valley is becoming one of the most important financiers and developers of modern warfare.

According to PitchBook data reported by the Financial Times, defense-tech startups raised $12.3 billion by late June 2026, surpassing the $9.95 billion raised throughout 2025.

Behind that surge is a major shift in how military technology is financed, developed, and deployed.

• Y Combinator is backing startups developing AI-guided missiles, autonomous strike drones, and battlefield targeting technology.

• Sequoia, Andreessen Horowitz, General Catalyst, and other prominent investors are funding weapons companies that have reached multibillion-dollar valuations.

• Institutional capital is entering the industry. JPMorgan, Blackstone-managed funds, Goldman Sachs Alternatives, and Canada's national pension investment manager have participated in major defense-tech financings.

• AI-assisted targeting is already being used in active conflicts. Investigations into Gaza exposed systems called Lavender, The Gospel, and Where's Daddy?, while Palantir's Maven and Anthropic's Claude have been used during America's military campaign in Iran.

• The February 2026 bombing of an elementary school in Minab, Iran, exposed catastrophic failures in military targeting, including outdated intelligence and inadequate civilian-protection safeguards.

America and its allies have legitimate defense requirements. Advanced military technology can strengthen deterrence, improve interception systems, and protect civilians.

But as private capital finances increasingly powerful weapons and targeting systems, who is responsible when the technology, intelligence, and humans overseeing them fail?

💰 | Silicon Valley's New War Economy

For decades, established contractors such as Lockheed Martin, RTX, Northrop Grumman, and Boeing dominated America's defense industry.

A new generation of startups is challenging that model with commercial software, autonomous systems, rapid development cycles, and manufacturing designed to scale.

The funding numbers illustrate how quickly investors have embraced the sector.

Anduril Industries offers perhaps the clearest example.

Founded in 2017, Anduril raised $5 billion in May 2026 at a $61 billion valuation, with backing from firms including Andreessen Horowitz, Thrive Capital, and Founders Fund.

Its products span autonomous aircraft, counter-drone systems, surveillance infrastructure, and Lattice, software that integrates military intelligence and operational information.

The company's reported 2025 revenue reached approximately $2.2 billion.

From YC Demo Day to the battlefield

Y Combinator helped launch Airbnb, Stripe, Coinbase, and DoorDash.

Today, YC is funding companies developing military weapons and battlefield targeting systems.

Its Fall 2026 Requests for Startups included a direct invitation from U.S. Secretary of the Army Daniel P. Driscoll to entrepreneurs developing military technology, including systems intended to reduce the military's cost per kill.

Among its newest defense startups:

• Polemos Industries (F2026): AI-guided ballistic missiles and compact launchers connected to reconnaissance drones.

• Greypoint Industries (S2026): Drone swarms designed to locate battlefield radio emitters, including enemy drone operators.

• Seeing Systems (W2026): Modular autonomous strike drones undergoing military testing and evaluation.

• Isengard Industries (S2026): Precision-strike and counter-drone weapons designed for mass production.

These are young companies whose technologies vary in maturity, commercial validation, and deployment status.

Further along, several venture-backed defense businesses have reached extraordinary valuations.

Neros raised $250 million in August to develop autonomous strike and interceptor drones.

Castelion raised $800 million in equity alongside a committed $250 million credit facility. Its Blackbeard program focuses on lower-cost hypersonic missiles, with deployment targeted for 2027.

Shield AI develops autonomous flight software through Hivemind, while Germany's Helsing is developing military AI and autonomous aircraft, including the HX-2 strike drone.

The investment thesis is understandable.

Government procurement creates enormous market opportunities. Specialized manufacturing and engineering produce competitive advantages, while recurring software contracts and integration into military infrastructure can create durable revenue.

The strategic value of these technologies is also substantial, particularly for interception, intelligence, and the protection of critical infrastructure.

But the consequences of a defective military system extend far beyond a failed product launch.

🏦 | Follow the Money: The Institutions Financing Warfare

The defense-tech boom extends beyond venture capital firms.

Major financial institutions are increasingly investing directly in military technology.

Helsing's July 2026 $1.8 billion round included CPP Investments, the organization responsible for investing assets of the Canada Pension Plan.

Goldman Sachs Alternatives and JPMorganChase also participated.

Castelion attracted investment from JPMorgan's Strategic Investment Group and Carlyle-managed funds alongside Andreessen Horowitz.

Blackstone-managed funds committed $500 million in preferred financing to Shield AI.

In August 2025, a16z general partner David Ulevitch published Investing Capital to Defend the Nation, arguing that pension funds, sovereign wealth funds, insurers, and endowments should play larger roles in financing America's national-security industries.

The reasoning is grounded in legitimate strategic needs. Domestic manufacturing, secure supply chains, and technological independence matter to national defense.

These investments also raise questions about the standards institutional investors apply to technologies intended for military operations.

How are civilian-harm risks assessed? What safeguards do investors expect portfolio companies to maintain? How much visibility do institutional LPs have into their indirect exposure?

These questions become especially important when privately developed systems are incorporated into military targeting processes.

🛰️ | Gaza: The AI War That Came Before Minab

AI-assisted targeting was already a major controversy before the February 2026 bombing in Iran.

Investigations by +972 Magazine, Local Call, and The Guardian exposed how Israel's military used automated intelligence and targeting systems during its campaign in Gaza following October 7th, 2023.

Three systems became particularly controversial.

Lavender: 37,000 potential targets

In April 2024, journalist Yuval Abraham published an investigation based on interviews with six Israeli intelligence officers.

According to those sources, Lavender had flagged approximately 37,000 Palestinians as suspected militants at one stage of the war.

One source described spending roughly 20 seconds reviewing certain targets, primarily checking whether the identified individual was male.

The investigation also alleged that military authorities permitted substantial civilian casualties when targeting suspected militants, including reported thresholds of 15 to 20 civilians for some lower-ranking targets during an early phase of the campaign.

The Israeli military disputed central claims, maintaining that analysts independently verify targets and that its systems do not autonomously authorize attacks.

The Gospel and Where's Daddy?

Another system, Habsora, or The Gospel, helped generate potential targets involving buildings and infrastructure.

Former Israeli military chief Aviv Kochavi described AI-assisted target production reaching approximately 100 targets per day, compared with around 50 annually under earlier processes.

A third system, called Where's Daddy?, tracked designated individuals and alerted operators when they entered particular locations, including family homes.

Human Rights Watch subsequently examined these technologies, warning that unreliable data, flawed calculations, and excessive confidence in automated recommendations could (and did) increase civilian harm.

The private technology connection

In August 2025, The Guardian, +972 Magazine, and Local Call reported that Israel's Unit 8200 had used Microsoft Azure to store and analyze millions of intercepted Palestinian phone calls.

Intelligence sources alleged that information from this surveillance operation helped identify potential targets in Gaza.

Following an internal review, Microsoft announced in September that it had disabled specified cloud storage and AI services used by a unit within Israel's Ministry of Defense.

Microsoft confirmed finding evidence supporting elements of the investigation.

Palantir separately established a relationship with Israel's Ministry of Defense following October 7. It has explicitly denied developing or participating in Lavender and Gospel.

🎯 | From Gaza to Minab: The AI Kill Chain

Modern military targeting relies on satellite imagery, surveillance aircraft, intercepted communications, radar, and historical intelligence databases.

AI can process that information much faster than traditional analytical workflows.

One of the most important platforms is Palantir's Maven Smart System.

Maven combines intelligence and operational information to support target identification and prioritization.

Anthropic's Claude was integrated into the U.S. military's Maven configuration.

According to March 2026 reporting by The Washington Post, the combined system helped generate and prioritize targets during the opening stages of America's military campaign against Iran.

The danger emerges when unreliable intelligence moves through sophisticated software and gains credibility because the output appears precise.

This phenomenon, known as automation bias, is central to the investigation into Minab.

What went wrong?

On September 18, Bloomberg published Inside the US Kill Chain That Destroyed an Iranian School.

Its investigation, based partly on interviews with officials involved in the Pentagon's internal review, identified a series of preventable failures.

Shajareh Tayyebeh school stood on land previously associated with an Iranian military facility.

Satellite imagery showed changes separating the school from surrounding military property by 2017. An American analyst reportedly identified changes in 2019, but that information remained disconnected from the principal targeting database.

The site's outdated military classification persisted.

When American planners prepared strikes against Iran, the location entered Maven and emerged among the recommended first-day targets.

According to Bloomberg's sources, some personnel relied excessively on Maven, expecting it to flag outdated or inconsistent intelligence.

The error survived human review.

Bloomberg also reported major reductions in Pentagon civilian-harm mitigation personnel. At U.S. Central Command, the dedicated team reportedly fell from ten people to one per Pete Hegseth’s insturctions

No member of that team reviewed the Minab target before the strike.

Palantir maintains that the underlying intelligence is the government's responsibility and that there is no evidence Maven malfunctioned.

Claude's integration into Maven during the wider Iran campaign is documented, although its precise role in selecting or processing the Minab target remains unestablished publicly.

In September, a UN fact-finding mission found reasonable grounds to believe the Minab strike constituted a U.S. war crime, citing failures to verify the school's civilian status.

The U.S. government rejected the mission's assessment. Its findings represent an investigative conclusion rather than a criminal conviction.

Scahill's investigation documented what the technical findings cannot convey alone.

Rescue workers described recovering children's remains and identifying victims through clothing and school belongings. Medical facilities were overwhelmed. Psychologists documented severe trauma among surviving children.

Families continued searching for answers months after the attack.

⚓ | What This Means for Early-Stage Investors

Defense technology offers substantial opportunities for startups solving urgent problems in interception, intelligence, manufacturing, and autonomous navigation.

The investment analysis also needs to account for the consequences of how these technologies are deployed.

Investors should understand a product's actual capabilities, who can purchase it, how its use is restricted, and what safeguards govern its operation.

For AI-assisted targeting systems, testing, auditability, human oversight, and incident-response procedures should be essential components of diligence.

Commercial validation matters too. Letters of intent, pilot programs, signed contracts, and operational deployments represent different levels of evidence.

These considerations can influence legal exposure, government relationships, and long-term enterprise value.

🧭 | The Dhow Perspective

At Dhow, our work focuses on backing exceptional founders building technologies capable of creating substantial economic value.

Defense technology deserves serious consideration because credible defensive capabilities are essential to national security.

For Muslim investors, this also raises questions about the relationship between financial compliance and ethical responsibility.

Islamic investment screening provides important standards for evaluating business activities and financial structures. Understanding corporate conduct, human-rights risks, and the downstream uses of financed products can provide an additional layer of diligence.

The investigations into Gaza and Minab illustrate why these questions matter.

We believe investors should understand what they are financing, who uses the technology, and the safeguards governing its deployment.

✅ | Bottom Line

Silicon Valley is reshaping modern warfare.

Some of the world's most influential investors are financing autonomous aircraft, precision weapons, military AI, and targeting technologies.

These capabilities can strengthen legitimate national defense.

Investigations into Gaza and Minab also show the risks of unreliable intelligence, inadequate human oversight, and failures in civilian protection.

In Minab, military intelligence incorrectly classified a school. The location moved through an AI-assisted targeting process and was authorized for attack.

More than 150 people were killed in Minab. Fatemeh Yazdanpanah was just six years old. That morning, her father kissed her goodbye and sent her to school. By nightfall, he was searching for her body among the dead.

As Silicon Valley pours billions into the future of warfare, Minab raises a question that every investor, founder, and government should have to answer: Who bears responsibility when the technology they build, finance, and deploy takes innocent lives?

As private capital finances increasingly powerful military technologies, the institutions building and deploying them must be held to rigorous standards of accountability and civilian protection.

Interested in investing alongside us?

At Dhow, we’re watching where the market is getting crowded and where it’s still being mispriced. AI is pulling record amounts of capital into venture, but the broader private market is still sorting through stale 2021 valuations, weak liquidity, and a widening gap between the companies everyone wants and everyone else. For early-stage investors, that makes entry price, ownership, dilution, and sourcing matter more than ever. The opportunity is still there, but the easy money is gone. Join the movement, share this with a friend (or two).

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Sources:

• Venture capital and defense technology

  1. Financial Times, Wars Trigger $12bn Venture Capital Rush Into Defence Tech, June 2026

  2. Y Combinator, Fall 2026 Requests for Startups

  3. Y Combinator, Defense Startup Directory

  4. Andreessen Horowitz, Investing Capital to Defend the Nation, August 2025

  5. Neros Technologies, Series C Announcement, August 2026

  6. Castelion, Series C Announcement, August 2026

  7. Shield AI, Series G Announcement, March 2026

  8. Helsing, Series E Announcement, July 2026

  AI-assisted warfare in Gaza

  1. Yuval Abraham, Lavender: The AI Machine Directing Israel's Bombing Spree in Gaza, +972 Magazine, April 2024

  2. The Guardian, The Gospel: How Israel Uses AI to Select Bombing Targets, December 2023

  3. Human Rights Watch, Gaza: Israeli Military's Digital Tools Risk Civilian Harm, September 2024

  4. Microsoft, Update on Ongoing Microsoft Review, September 2025

  5. Palantir, Response to UN Special Rapporteur, May 2025

  Minab and military AI

  1. Jeremy Scahill, Murtaza Hussain, and Reza Sayah, Massacre at Minab, Drop Site News, September 2026

  2. Bloomberg, Inside the US Kill Chain That Destroyed an Iranian School, September 2026

  3. The Washington Post, Anthropic's AI Tool Claude Central to U.S. Campaign in Iran, March 2026

  4. Reuters, UN Mission Finds Grounds to Believe US Committed War Crimes in Iran, September 2026