Convert Pilots Into Procurement Programs
Scott Sanders, chief growth officer at Forterra, on the defense tech startup playbook
The real filter in defense tech is not whether a startup can win a small contract, it is whether it can convert early demand into a funded program that buys at scale. In practice, SBIRs are useful as experiments and credibility points, but they rarely create the multi year demand, production planning, or pricing foundation that turns a prototype into a durable business. That is why Sanders separates them from meaningful traction.
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At Anduril, the inflection points were not grants, but a first paid order, then a $12.5M Marine Corps contract, then a much larger program level win. Sanders describes SBIRs as low probability pathways to scale, and contrasts them with commercial item contracts tied to real procurement budgets.
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The core issue is money color and time horizon. Small Business Innovation Research dollars and O&M pilots can fund testing and user feedback, but they usually do not give a startup the two year runway, recurring demand signal, or predictable long term contract structure needed to become a program of record.
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This is why product first companies like Anduril and Forterra self fund large parts of R&D and aim at big procurement lines. Forterra says it deployed 200 plus systems in 2025 across multiple buyers, while Anduril scaled from early six figure contracts to an estimated $1B of revenue in 2024 and $2.1B in 2025.
Going forward, the winners in defense tech will be the companies that use small pilots only as a bridge, then quickly align product, pricing, and production around larger procurement channels. The market is moving toward repeatable hardware software systems that can ship fast, fit existing budget lines, and survive the long march to programs of record.