San Antonio has called itself Military City USA for a long time. What’s changed in the last couple of years is the startups. Between Austin and San Antonio, along I-35, there’s now a cluster of defense tech companies winning real contracts and raising real money.
We’re a San Antonio engineering firm, so we watch this closely. Here’s a snapshot of what’s happening, and where software subcontractors like us actually fit.
Austin: counter-drone and autonomy
The biggest recent news is from Austin. On October 1, the Austin Business Journal reported that Allen Control Systems won an Army counter-drone contract as part of Domestic Shield, a program focused on counter-unmanned aircraft systems for facilities inside the U.S.
Per Austin Founders Feed, the contract has a ceiling of up to $500 million. The company builds Bullfrog, an autonomous weapon station that uses computer vision and AI to detect, track and target incoming drones. It raised a $200 million Series B earlier this year at a $2.2 billion valuation and announced a 191,000-square-foot manufacturing facility in the Austin area.
It’s not the only one. In August, the Austin Business Journal reported that NODA AI secured a $100 million DoD contract for autonomous mission command, about six months after a $25 million Series A. The same piece covered Smack, an Austin- and California-based startup founded by two Marine Forces Special Operations Command veterans, which raised a $61 million Series B for an AI reasoning layer that helps commanders model scenarios.
San Antonio: drones, secure software and cyber
San Antonio’s cluster leans toward secure software, cyber and tactical hardware.
- Defense Unicorns, founded in 2021, provides secure delivery of software across military operations. In January it announced a $136 million Series B at a $1 billion valuation.
- Darkhive, based on the South Side, won a $49.7 million award through the Pentagon’s APFIT program to ramp up production of tactical drones and battlefield communications gear. The report notes it’s the program’s single largest award to date. Darkhive also announced a $30 million Series B led by RTX Ventures.
- Cyber work continues around the 16th Air Force. Today, Telos announced a $13.5 million, three-year contract to continue supporting Air Force intelligence community cyber operations.
There’s also infrastructure for founders. Capital Factory runs its Center for Defense Innovation at the Boeing Center at Tech Port, and its Defense Academy helps startups learn to sell to the Department of Defense. As Port San Antonio’s Will Garrett put it, the federal government is “more frequently looking outside the traditional federal contractor space to find technology and solutions that are moving more quickly.”
Every one of these companies is a software company
Look at the list again. Computer vision targeting. Autonomous mission command. An AI reasoning layer. Secure software delivery. Tactical communications. Even the hardware companies are, underneath, software companies.
That creates a predictable crunch. A startup wins a contract or a big round, and suddenly needs to:
- Ship features on a delivery schedule a program office is watching
- Build the data pipelines, dashboards and integrations around the core product
- Meet security requirements that a seed-stage team never had to think about
- Hire cleared or clearable engineers in a tight market
Hiring alone rarely keeps up.
Where software subcontractors fit
In our experience, outside software teams are most useful in a few specific places:
Around the core, not in it
Your core IP, whether that’s the targeting model, the autonomy stack or the radio, should usually stay in-house. The work around it is often a better fit for a subcontractor: operator dashboards, data ingestion, test harnesses, admin tools, integrations with government systems, and the cloud infrastructure everything runs on.
When the timeline beats the hiring plan
A contract award comes with dates. If it takes four months to hire and onboard a senior engineer, a team that can start next week is worth a lot.
Senior technical leadership
Many defense startups are founded by operators and domain experts, not career software leaders. A fractional CTO can own architecture, security and delivery decisions until it makes sense to hire full-time.
Getting ready for compliance and authorization
Primes and program offices will ask how you handle sensitive data, how you build securely, and how your software gets approval to run on government systems. Designing for that early is much cheaper than retrofitting it.
What primes and startups look for in a subcontractor
If you’re on the hiring side, here’s what we’d ask of any software partner:
- U.S.-based people who can work within export-control rules when the program requires it
- A security story that holds up: who can access code and data, and how
- Senior engineers, not a bench of juniors learning on your contract
- Willingness to work inside your process, your repos and your tools
- A track record of delivering, with references you can call
Why being local still matters
A lot of this work can be done remotely. But proximity still helps: being able to sit in a room at Port San Antonio or drive up to Austin for a test day builds trust faster than any number of video calls.
That’s the work we do. If you’re a defense or dual-use company on the I-35 corridor and you need software delivered, see our defense and dual-use page or book a call.
