Defense Startups Use SPACs to Fund Rapid Expansion

Early-stage defense and space companies are increasingly utilizing special purpose acquisition companies (SPACs) to go public in 2026. Six companies in the sector have announced SPAC mergers this year, including Quantum Space, Elroy Air, and Space-Eyes. This trend is driven by a desire for faster capital access and a broader industry boom fueled by the listing of SpaceX and rising government spending.

Ursa Major agreed to a $2.3-billion SPAC deal to expand the domestic production of its propulsion systems. CEO Chris Spagnoletti stated that a SPAC transaction allows the company to respond to customer demand rather than market timing, noting that a traditional IPO would have left the schedule to the market window.

This surge in private investment coincides with a proposed increase in the 2027 national defense budget to approximately $1.5 trillion under the Trump administration to replenish stockpiles and strengthen defenses. Additionally, the sector has seen increased involvement from the Trump family, with Eric Trump and Donald Trump Jr. investing in drone and counter-drone startups such as XTEND and Space-Eyes.