Thrilling Chance for Startups: Partner with the U.S. Navy!

As executives from leading Silicon Valley firms such as Palantir, Meta, and OpenAI swap their Brunello Cucinelli suits for Army Reserve uniforms, a significant yet understated transformation is underway in the U.S. Navy.

What is driving this change? Navy Chief Technology Officer Justin Fanelli has dedicated the past two and a half years to dismantling bureaucratic obstacles and lengthy procurement procedures that have long hindered startups from partnering with the military. This initiative marks a subtle but potentially revolutionary shift aimed at enhancing government efficiency and fiscal accountability.

“We are more open to partnerships than ever before,” Fanelli noted during a recent Zoom discussion with TechCrunch. “We are eager to listen and engage in new ways, understanding that if a company has an exceptional solution, we are ready to collaborate.”

These partnerships are supported by what Fanelli refers to as the Navy’s innovation adoption kit, equipped with frameworks and tools designed to assist potential collaborators in navigating the often complex transition where groundbreaking technologies can stall between the prototyping and full production phases. “In the past, our engagement strategies resembled a complicated map,” he explained. “Now, it’s a streamlined funnel showing that if you can deliver meaningful results, we are interested in considering you for enterprise service.”

Recently, the Navy rapidly progressed from a Request for Proposal (RFP) to a pilot deployment in less than six months with Via, a cybersecurity startup from Somerville, Massachusetts. Via aids large organizations in securing sensitive data through decentralization, significantly reducing risks tied to centralized data breaches. (The U.S. Air Force is also a client of Via.)

The Navy’s refreshed approach is based on what Fanelli describes as a “horizon” model, influenced by McKinsey’s innovation framework. Companies traverse three phases: evaluation, structured piloting, and scaling into enterprise services. Fanelli emphasizes that the Navy now prioritizes identifying problems over fixating on pre-defined solutions, setting it apart from typical government contracting practices.

“Instead of stating, ‘We need this issue resolved in our usual manner,’ we define the problem and inquire who is ready to tackle it and how,” Fanelli clarified.

Fanelli’s passion for modernizing Navy technology is deeply personal. A former Air Force scholarship cadet studying electrical engineering, he was disqualified from military service due to a respiratory condition. Eager to serve, he opted for the Navy over private-sector paths more than two decades ago because he “wanted to belong to those in uniform.” His career encompasses various roles in defense, intelligence, DARPA, and open-source initiatives, culminating in his return to the Department of the Navy.

The initiatives he champions are opening avenues for businesses that have previously been reluctant to engage with government projects due to concerns about ineffectiveness. He recalls a competition organized by the Defense Innovation Unit (DIU), where the Navy anticipated only a few bids for a specialized cybersecurity challenge but was taken aback to receive nearly 100 submissions — many from companies unfamiliar with the DoD but addressing similar challenges in the private sector.

Fanelli mentioned that his team has documented several success stories, including one where a venture-backed startup employed robotic process automation to clear a two-year backlog of invoices in just weeks. Additionally, upgrades to a network on an aircraft carrier saved 5,000 sailor hours in the first month.

“This not only improved availability but also boosted morale, allowing for more time to take on extra responsibilities,” Fanelli emphasized, noting that time saved is just one of five metrics the Navy uses to gauge the success of pilot programs. Other metrics include operational resilience, cost per user, adaptability, and user experience.

Looking ahead, Fanelli identified several key focus areas, especially in AI, where the Navy is actively collaborating with diverse teams. The Navy seeks to expedite AI integration beyond basic generative applications to incorporate more proactive applications, such as onboarding, personnel management, and data processing aboard ships. He also mentioned exploring “alternative” GPS solutions and highlighted the swift adoption of innovative precision navigation and timing software, particularly for unmanned systems. Furthermore, he pointed out an urgent need to modernize legacy systems including air traffic control infrastructure and ship-based technologies.

On funding, Fanelli acknowledged that while he couldn’t disclose specific budget details, the Navy currently allocates single-digit percentages to emerging and commercial technologies, indicating a shift away from traditional defense contractors — a trend he anticipates will evolve considerably as advancements in AI continue.

When addressing the main reasons promising technologies stumble during evaluations, Fanelli noted that it’s not solely due to technical deficiencies. He pointed out that the Navy operates on extended budget cycles, complicating the acquisition of funding for new solutions that do not replace or deactivate existing systems.

“If we recognize a benefit and can quantify it, but there’s no funding [for the startup] for a year and a half — that creates challenges for both their investors and our users,” Fanelli explained. “Sometimes it’s a zero-sum game. Other times, it isn’t. If we aim to alter the dynamics between the public and private sectors in favor of the private side, we must address the significant technical debt we face.”

During our conversation, we also discussed the effects of the Trump administration’s “America First” policies on these processes. Fanelli mentioned that the current emphasis on domestic manufacturing aligns seamlessly with the Navy’s resilience objectives, highlighting digital twins, additive manufacturing, and on-site production capabilities to alleviate supply chain vulnerabilities.

Nonetheless, the Navy’s message to entrepreneurs and investors is clear: it provides an attractive alternative to conventional commercial markets, a sentiment that appears to resonate in Silicon Valley, where interest in collaborating with the U.S. government is on the rise.

Meta’s Andrew Bosworth recently remarked at a Bloomberg event in San Francisco: “There’s a much stronger patriotic underpinning than people generally attribute to Silicon Valley.”

As industry experts would concur, this represents a substantial departure from the skepticism that has characterized much of the Valley in recent years.

Now, Fanelli is enthusiastic about attracting more of that interest specifically to the Navy. He told TechCrunch, “I would warmly welcome anyone interested in contributing to the greater mission from a solutions-oriented perspective to join us on this journey.”

If you are interested in hearing the full conversation with Fanelli, you can find it here.