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Opinion: Australia’s shifting strategic environment demands a new model, one that harnesses private equity to scale homegrown defence innovation, aligns national interest with investment, and builds a sovereign industry delivering capability at the pace of relevance, explains Aurizn CEO Rebecca Humble.
Australia’s strategic environment is being reshaped in real time. From maritime grey zone tensions to emerging technologies that rewrite the rules of conflict, the threats we face are no longer distant or predictable. They are complex, networked and accelerating, and that means our response must be too.
The reality is that our nation cannot meet these challenges with yesterday’s delivery model. For decades, defence capability in Australia has been defined by the importing of defence technology, a gap in investment, and the loss of advanced skills to other industries or nations. While this presents a challenge, it also represents a stark opportunity to prioritise innovation and accelerate the commercialisation of homegrown defence tech.
If Australia is serious about building homegrown defence capability, we need to look beyond the traditional levers of government funding and foreign partnerships. We need a new source of momentum, and that’s where private equity can play a transformative role.
Private equity can sometimes be caricatured as short-term, rather than nation-building. But when aligned with national interest, private equity can be the essential capital that drives scale, governance and growth, precisely what the invisible mid-tier in Australia’s defence industry needs to compete globally.
Private investors bring more than funding. They bring strategy, accountability, discipline and the ability to move fast on commercial decisions that is needed if Australian defence companies are to mature, compete and grow. In a sector where contracts can take years to mature, that agility matters. It allows companies to invest in research and development (R&D), facilities, and talent ahead of demand. This is what gives a defence technology company its edge, the ability to anticipate, not just react.
Through a career spent observing the accelerated growth of mid-tier defence firms in the US and Europe, I’ve seen private equity act as a force multiplier. It can play a role in Australia too, enabling Australian-owned firms to operate at the scale required to deliver complex capability, without surrendering control or intellectual property offshore. It bridges the gap between the agility of small innovators and the delivery muscle of the primes, a gap that has long constrained Australia’s industrial base.
Aurizn, the company I lead, has accessed private capital to expand rapidly in areas of strategic national importance: simulation, synthetic environments, advanced sensing, decision support and mission systems, delivering across the mission life cycle. These technologies are not decades away, they are being deployed today, delivering operational advantage to Defence and commercial customers alike.
This ability to self-fund capability development is crucial. It provides the freedom to take calculated risks, explore dual-use applications, and partner with Defence from a position of strength. It also enables Australian companies to export their technologies, creating new markets and strengthening economic resilience, ensuring our nation has a seat at the table as a credible partner on the international stage.
But we must also be clear-eyed about the realities. Private capital flows where returns exist. Its strategic value depends on aligning national interest with commercial viability. That means Defence must be willing to co-invest, de-risk, and create fast-track pathways for promising technologies to move from R&D to deployment. Together Defence and industry can work to ensure focus on the most urgent problems while avoiding the “valley of death” that stalls many innovations.
Traditionally, private equity in Australia has steered away from the slower pace and lower returns of the defence sector. However, in a scenario of strategic alignment between defence and industry, private equity can work to deliver Australia with the financial independence to back its own ideas, scale its own talent, and deliver solutions that are truly homegrown. Capability doesn’t have to come from billion-dollar primes alone. Mid-tier companies, supported by private equity, can take on significant roles in design, testing, integration and sustainment, delivering faster and cheaper across the mission life cycle.
As the global defence economy becomes increasingly commercialised, Australia can’t afford to be left behind. In the United States, private capital is already driving innovation in areas such as autonomy, data fusion and cyber resilience. Start-ups and mid-tiers backed by venture and growth funds are delivering real capabilities to the Pentagon at unprecedented speed. There’s no reason the same can’t happen here, but we must be prepared to modernise more than just our defence platforms, we must also be ready to modernise how we think about investment.
Private equity’s discipline brings a commercial lens to capability delivery. It drives focus on outcomes. It makes us consider whether a solution can be delivered, sustained and scaled, rather than on inputs or processes. It embeds performance, governance and accountability into the culture of a company, creating businesses that can thrive well beyond a single contract cycle. This mindset is essential if we want Australia’s defence industry to grow sustainably.
Critically, public and private investment shouldn’t be seen as competing forces. They are complementary. Government can provide the strategic imperative, but it’s the combination of capital, capability and conviction that builds enduring national advantage. When these two forces align, when public purpose meets private investment, the result is capability at the pace of relevance. Australia is not alone in seeking to bring government and investors together to partner on defence. As the UK’s defence secretary said earlier this year, “Responsibility for our continent’s defence is an ethical investment.”
If Australia is to meet its national security ambitions and deliver capability to the Australian Defence Force faster, we need a new generation of defence industry. This next generation will come from the partnerships we forge now. From Defence, industry, research and investors who share a long-term vision for Australia’s security and prosperity. In this environment private equity is not a threat to sovereignty, but instead the mechanism that enables it.
