David Rothzeid on How Shield Capital Fuels Dual-Use Innovation in Defense-Tech

This is the third of four episodes in a special series dedicated to the 2025 NVCA Award Recipients. To learn more about the NVCA and their work in crafting the future of Venture Capital, visit their website at https://nvca.org/. 

Highlights

• Shield Capital invests at the nexus of national security and commercial technology, focusing on AI, autonomy, cybersecurity, and space.
• David Rothzeid’s career evolved from Air Force acquisition officer to venture capitalist specializing in defense innovation.
• The Defense Innovation Unit and SBIR programs have revolutionized how startups engage with the DoD, allowing faster adoption of new tech.
• SpaceX and Palantir serve as pivotal examples of reshaping defense tech markets through innovation and commercial viability.
• Successful defense startups often pursue dual-use technology strategies, balancing military applications with commercial scalability.
• The military-industrial complex is evolving into an “American industrial complex” that integrates commercial tech innovation with national security.
• Portfolio highlight: Albedo’s very low Earth orbit satellites provide ultra-high-resolution imagery with significant commercial and defense applications.

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Summary

In this episode of the Innovators and Investors Podcast, host Kristian Marquez interviews David Rothzeid, a principal at Shield Capital and recent recipient of the NVCA award. The discussion centers on Shield Capital’s investment thesis, which focuses on the intersection of national security and commercial technology, particularly in dual-use sectors like artificial intelligence, autonomy, cybersecurity, and space. David shares his career journey from an Air Force acquisition officer to a venture capitalist specializing in defense tech startups, emphasizing the evolving relationship between Silicon Valley innovation and the Department of Defense (DoD).

David explains how Shield Capital supports early-stage companies, helping them navigate the complexities of selling to the DoD while also commercializing their technologies for broader markets. The conversation highlights the transformation in government procurement processes, with programs like the Defense Innovation Unit (DIU) and SBIR grants fostering quicker adoption of innovative technologies. However, challenges remain, such as bureaucracy and long sales cycles. The episode also touches on the military-industrial complex’s evolving nature, advocating for a more integrated “American industrial complex” where commercial innovation benefits national security.

David discusses notable catalysts that have reshaped defense technology, including SpaceX’s impact on space access costs and Palantir’s role in software innovation within the military. He underscores the importance of startups maintaining dual-use applications to succeed commercially and within government markets. Additionally, David highlights an example portfolio company, Albedo, which develops satellites in very low Earth orbit capable of ultra-high-resolution imagery, serving both defense and commercial needs.

The interview concludes with personal reflections from David on career advice, the importance of community, and his ongoing service as a reservist, illustrating a balance of mission-driven work and entrepreneurial innovation.

Key Insights

• Investment at the Intersection of National Security and Commercial Markets: Shield Capital’s thesis centers on dual-use technologies, recognizing that entrepreneurs who can navigate both commercial and defense sectors are positioned for superior growth. This approach aligns economic incentives with national security outcomes, creating a virtuous cycle of innovation that benefits both private investors and public defense needs. The focus on early-stage investments allows for hands-on support, helping startups overcome the unique challenges of government contracting while scaling commercially.
• Transformation of Defense Procurement and Innovation Adoption: Historically, government procurement was seen as slow and rigid, often disconnected from Silicon Valley’s rapid innovation pace. The establishment of the Defense Innovation Unit (DIU) and programs like SBIR have begun bridging this gap by fostering faster technology adoption and building trust between startups and the DoD. However, despite progress, bureaucratic hurdles and long sales cycles remain a challenge, requiring startups to be patient and well-capitalized to bridge the gap between prototype and large-scale deployment.
• Catalysts Driving Defense Tech Evolution: SpaceX’s dramatic reduction in launch costs has democratized access to space, enabling new applications and markets, while Palantir’s software innovations have revolutionized data use and battlefield intelligence. These companies exemplify how commercial innovation can disrupt and enhance traditional defense capabilities, encouraging startups and VCs to rethink how military technology is developed and procured. Their success stories also serve as proof points for the viability of dual-use technology ventures.
• Dual-Use Technology as a Strategic Imperative: The dual-use model, where technologies serve both commercial markets and defense applications, is increasingly critical. It allows startups to leverage larger commercial markets for scale and profitability while meeting defense needs. This dual approach mitigates risks associated with the long defense sales cycles and rigid procurement processes, enabling companies to grow sustainably while contributing to national security. Shield Capital actively advises startups on when to pursue DoD contracts and when to focus on commercial customers, emphasizing strategic alignment with business goals.
• Reframing the Military-Industrial Complex: Rather than a separate “military-industrial complex,” David advocates for an integrated “American industrial complex” that includes commercial tech firms contributing to national security. Drawing historical parallels to World War II industrial mobilization, this modern complex leverages entrepreneurial innovation and private capital to accelerate defense technology development. This reframing reduces the perception of conflict between commercial interests and defense needs, fostering collaboration for mutual benefit.
• Innovative Portfolio Examples Highlight Market Potential: Albedo, a Shield Capital portfolio company, exemplifies the promise of dual-use space technology. By operating satellites in very low Earth orbit, Albedo delivers unprecedented imagery resolution with applications spanning defense intelligence to commercial sectors like agriculture and infrastructure monitoring. This demonstrates how cutting-edge technology can serve diverse markets, validating Shield Capital’s thesis and the broader dual-use strategy.
• The Importance of Community and Mentorship in Venture Capital and Defense Innovation: Beyond technology and capital, David emphasizes the role of community, exemplified by his shout-out to Eringer Helbling and initiatives like Project Sunrise yoga sessions. Such connections foster mental well-being, resilience, and collaboration—key ingredients in the high-stress environments of defense innovation and venture capital. This human element underscores that success in this complex ecosystem depends not only on technology but also on relationships and shared purpose.

This conversation provides a comprehensive view of how venture capital is evolving to support defense innovation, the challenges and opportunities startups face when engaging with the DoD, and the broader implications for national security and commercial technology markets.

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