Trump administration plans to fund American drone companies - WSJ
Kyiv • UNN
The Pentagon plans to fund UAV manufacturers to increase production and lower prices. The US government may acquire ownership stakes in private companies.
The administration of U.S. President Donald Trump is seeking to strike financing deals with a group of drone companies as part of efforts to boost domestic production and lower the cost of these critical weapons, The Wall Street Journal reports, citing sources familiar with the situation, according to UNN.
Details
The potential deals are the result of months of discussions between various private drone companies and the Pentagon, sources said. The discussions involved the U.S. Office of Strategic Capital, a credit office established by the Biden administration to finance companies deemed critical to national security supply chains.
The talks are still at the discussion stage, sources cautioned, and Pentagon officials are continuing to vet the companies before finalizing any terms. However, at least some of the deals could include both debt and equity stakes through various mechanisms, giving the U.S. government an ownership stake in these companies, some of the sources said.
Among the companies the Pentagon has identified for possible funding are Performance Drone Works, which won a contract to supply the Army with reconnaissance drones; Unusual Machines, a drone component supplier whose shareholders and advisory board members include Donald Trump Jr.; and Neros Technologies, a Sequoia Capital-backed startup developing small FPV drones, according to people familiar with the matter.
Previous Pentagon investments have included loans with terms requiring companies to meet certain benchmarks before receiving funds. The Office of Strategic Capital, which the Pentagon says has about $210 billion in lending authority, has also made a series of investments in critical minerals.
A U.S. Department of Defense spokesperson said the department would not comment on "preliminary matters that are subject to change. The Department's final decision will be released in an official statement at a later date."
The goal of the financing operations is to support the production ramp-up of drone manufacturers to ensure supply, as well as to lower prices, sources familiar with the terms of the deals said. The funding will not be directed toward the procurement of drones, the sources added.
These efforts align with the goals of the Pentagon's "Drone Dominance" program—a $1.1 billion initiative aimed at building an arsenal of approximately 300,000 low-cost strike drones by the end of 2027. Many defense officials have stated that the U.S. needs to significantly increase production capacity and reduce costs to achieve these goals. Many American-made drones sell for tens of thousands of dollars more than the $5,000-per-unit price cap set by the Pentagon under the "Drone Dominance" program.
"According to estimates for 2025, the U.S. is capable of producing up to 100,000 drones per year. As a counterargument, one can point to Ukraine, which produced about four million drones last year. The drone industry constantly accuses the U.S. Department of Defense of not purchasing enough drones to fund future production," the publication states.
The deals initiated by the Pentagon would be the strongest signal yet from the U.S. military of its commitment to supporting drone startups, the publication points out.
Prior to Trump's second term, Pentagon sales accounted for less than 2% of all commercial and government sales of unmanned systems in the U.S. annually, according to data from the Defense Innovation Unit, a Department of Defense office that works with startups. This situation is likely to change significantly if the Pentagon receives its desired budget.
The Department has requested more than $54 billion for its drone management center, called the Defense Autonomous Warfare Group (DAWG), which is $225 million more than this year, the publication notes.