Y Combinator is betting on a company that wants to be the SpaceX of rockets, making it its first bet in the defense industry.

• Ares Industries wants to produce smaller, cheaper anti-ship cruise missiles.

• YC partner Jared Friedman says the company can do for missiles what SpaceX did for rockets.

• Friedman believes the missile startup’s work could be crucial if China goes to war with Taiwan.

Startup accelerator Y Combinator is backing its first weapons startup — a company that says it can make missiles smaller and cheaper than its competitors.

“Ares is building a new class of anti-ship cruise missile. We will deliver the capabilities the DoD needs in a form that is 10 times smaller and 10 times cheaper,” Ares Industries co-founders Devan Plantamura and Alex Tseng wrote in a post on YC’s website.

They both worked at other defense startups before joining forces to found Areas Industries in May of this year.

According to YC partner Jared Friedman, Ares Industries could prove crucial if China attacks Taiwan.

“While the world focuses on conflicts in Ukraine and the Middle East, the world is much closer to war in the Taiwan Strait than most people realize,” Friedman wrote in an Aug. 20 X post.

“In a war with Taiwan, we would be firing thousands of anti-ship missiles a week, and our stockpile would be depleted in a matter of days. The ability to produce enough missiles to be competitive is the best way to deter war,” he continued.

The investment in Ares Industries marks YC’s first-ever acquisition of a stake in a defense startup.

The famous startup accelerator is better known for its software picks. Its top picks include Airbnb, DoorDash, Dropbox, and Reddit.

But Friedman has high hopes for the young weapons maker. Ares Industries, he says, can do for missiles what Elon Musk’s SpaceX did for the rocket industry.

“When SpaceX put launch vehicles into space in 2002, Lockheed Martin and Boeing formed a duopoly. Similarly, Lockheed Martin and Raytheon are the only two major players currently providing cruise missiles,” he wrote on X last week.

“And just like when ULA made all the space rockets, the missiles these companies make now are bloated with years of high-cost, no-bid contracts,” he added, referring to the Lockheed Martin-Boeing joint venture.

In their post on the YC website, Plantamura and Tseng said they spent the summer building and testing multiple prototypes.

“In 11 weeks, we went from company inception to flight testing with our own design. We are on track to deliver early, operational missile systems to our first customers by mid-2025,” they wrote.

Representatives for Ares Industries and YC did not immediately respond to Business Insider’s request for comment, sent outside business hours.

There is no doubt that YC is not the only Silicon Valley company trying to destabilize the defense sector.

Former Google CEO Eric Schmidt said in April during a lecture at Stanford University that he was working with Udacity CEO Sebastian Thrun to mass-produce drones for Ukraine’s ongoing war with Russia.

“The way the system works, I am now a licensed arms dealer,” Schmidt said during the lecture, which was briefly posted on Stanford University’s YouTube channel this month before being removed.

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