This thesis was created by Sanchit Popli, a senior at Illinois Institute of Technology, for Genisys: Venture Capital for equity in 2024.

Thesis Statement

⚡ There is a growing opportunity to invest in the rapidly evolving Artificial Intelligence sector within Aerospace and Defense (A&D). While AI in A&D is in its early stages, its potential to transform satellite management, aircraft testing, and autonomous systems makes it a compelling investment opportunity. My thesis is focused on early-stage B2B startups and innovations that leverage AI in the fields of aerospace and defense.

Background

Artificial Intelligence (AI) within the Aerospace and Defense (A&D) industry is on the verge of massive transformation, as AI technologies are set to optimize operations, enhance defense capabilities, and revolutionize space exploration. The AI market in A&D, valued at $31.9 billion in 2024, is projected to grow to $45.8 billion by 2029, showing a CAGR of 7.5%. This growth reflects the increasing adoption of AI-driven solutions to address complex challenges in the defense and aerospace sectors.

AI’s application spans several verticals in A&D:

• Autonomous Systems: AI-powered drones and unmanned vehicles are transforming military operations, enabling more efficient surveillance and logistics.
• Satellite Management: AI optimizes communications and space operations, significantly improving mission success and reducing costs. Companies like SpaceX are leading this innovation.
• Cybersecurity: In a digital-first defense landscape, AI is critical for strengthening cybersecurity by detecting and responding to sophisticated threats more rapidly than manual processes.
• Space Exploration: AI is critical in modern space exploration, where it is used to optimize spacecraft navigation, support autonomous decision-making in uncharted environments, and process vast amounts of data collected from space missions.
• Predictive Maintenance: AI helps reduce aircraft downtime by up to 30%, as seen with Airbus’s AI-enabled systems, enhancing efficiency across military and commercial aviation.

The timing for investment is ideal due to both government and private sector initiatives. The U.S. Department of Defense has increased its AI budget by 50%, and NATO has launched a $1 billion innovation fund for AI and defense technology. Meanwhile, private companies like SpaceX and Blue Origin are integrating AI to push boundaries in space exploration, signaling a broader trend towards AI dominance in A&D.

With my background in AI, interest in aerospace, and my experience in building my own AI startup, I am well-equipped to identify and invest in startups harnessing AI's transformative power in this sector. Growing up surrounded by technology, combined with my passion for aviation, fuels my interest in this field. As a future investor, this is an opportunity not only to capitalize on an expanding market but to support innovations that will reshape global defense and space exploration.

Trends

The Aerospace and Defense (A&D) industry is currently undergoing significant shifts driven by Artificial Intelligence (AI) technologies. From my investor's viewpoint, this sector offers unprecedented opportunities, especially given the following key trends:

• Increasing Adoption of AI Despite Initial Hesitation
• Macro Trends Favoring AI Integration
• Focus on Efficiency and Cost Reduction