Navy Shifts Toward Co-Investment to Accelerate Hardware Deployment

For years, the U.S. Navy operated on a traditional R&D model, funding its own early-stage research to bridge the gap from seed rounds to Series B. As TechCrunch first reported, that model is being dismantled in favor of a "co-investment" strategy designed to pull proven commercial technology into the fleet faster.

Justin Fanelli, the Department of Navy’s chief technology officer, told TechCrunch that the Navy is shifting the responsibility of early-stage development to commercial investors. In exchange, Fanelli is providing a "cleaner signal" to the venture community by publishing vetted lists of long-term technology priorities. This shift means the Navy is now primarily purchasing from companies in the Series D through F stages.

While Fanelli noted that the Navy spends roughly $150 billion annually, most of that still flows through traditional channels. However, the goal is to move toward co-investment—supporting companies alongside private capital rather than relying solely on established prime contractors. Fanelli clarified that while taking direct equity stakes is the most aggressive form of this approach and remains rare, the more common practice is allowing companies to mature products independently before the Navy steps in to buy.

This pragmatic pivot toward deployment is already yielding results in hardware and software integration. Fanelli highlighted several recent acquisitions to TechCrunch:

* **Applied Intuition:** The Navy replaced a delayed shipboard camera system from a defense contractor with commercial cameras and software from Applied Intuition, which Fanelli said cut approximately four years off the timeline. * **Armada:** The Navy is procuring edge compute hardware, described as server-packed shipping containers for remote or ship deployment. * **Gecko Robotics:** The Navy has engaged Gecko Robotics for inspection tasks previously performed manually. * **Domino Data Lab:** This firm is now managing the Navy's machine learning pipeline. * **MQ-25 Stingray:** A $562 million contract was awarded this month for this autonomous refueling drone.

To keep this pipeline moving, Fanelli is streamlining the bureaucracy. He described a shift away from a "spaghetti chart" of entry points toward a funnel system. Furthermore, buying decisions are now handled by a small "source selection committee" to maintain a merit-based process and avoid sprawling review layers.

Despite the acceleration, Fanelli warned TechCrunch that the biggest hurdle to scaling these technologies is often budgetary rather than technical. Because the Navy operates on long planning cycles, new tools only survive if they can replace or "turn off" an existing expense.