Insights
Venture Capital

GovTech and the Modernization of National Security

9 min read

The Gap

The United States government is the largest buyer of technology on Earth. It is also, by most measures, the least efficient deployer of it. Federal agencies run mission-critical operations on COBOL systems written in the 1960s. Procurement cycles stretch years. Integration failures cost billions.

This is not sustainable. And the companies solving it represent one of the most compelling venture opportunities of the next decade.

Why Now

Several forces are converging to accelerate government technology modernization:

  • Geopolitical competition with China and Russia has made defense modernization a bipartisan priority
  • The DOGE initiative and broader government efficiency mandates are creating unprecedented demand for modern software in federal operations
  • Cloud migration mandates (FedRAMP, IL5/IL6) are forcing agencies to rebuild rather than patch legacy systems
  • A new generation of founders — many with military or intelligence backgrounds — are building companies purpose-built for government buyers

The Oakwater Thesis

We invest in GovTech and DefenseTech companies at the earliest stages where the asymmetry is greatest. Our focus:

  • Autonomous systems — unmanned platforms for ISR, logistics, and force protection
  • AI-enabled decision support — tools that compress the OODA loop for commanders and analysts
  • Secure communications — post-quantum cryptography and zero-trust architectures
  • Back-office modernization — ERP, HR, and financial management systems built for government compliance from day one

The Moat

GovTech companies that achieve Authority to Operate (ATO) and establish production contracts enjoy extraordinary competitive moats. Government switching costs are immense. Contract vehicles, once won, generate predictable revenue for years. And the TAM is effectively the federal budget — a number that rarely shrinks.

The founders we back understand that government is not a market you disrupt from outside. You modernize it from within, one agency at a time, with patience, compliance, and relentless execution.