Harpoon Ventures: Inside the VC Firm That Raised $183M to Bet Big on Defense Tech Before Silicon Valley
Military tech stirred up controversy in Silicon Valley, but Harpoon Venture's Larsen Jensen raised millions before it became a red hot billion-dollar vertical.
Business San Diego delivers in-depth profiles of founders and insights on the most successful companies, executives, and technologies in San Diego. Subscribe to make sure you don’t miss the next story.
In April, on a sunny evening in San Diego, top investors in the now red-hot defense technology sector, well-known Silicon Valley investors and founders gathered to celebrate Harpoon Ventures, one of the first VC firms that helped bring military technology investing into the mainstream.
The Harpoon team hosted its welcome reception at its Downtown office which overlooks Petco Park’s newly renovated Gallagher Square, a $20 million upgrade that was completed in March. Guests included partners from Andreessen Horowitz, Lightspeed Venture Partners, and family office investors who flew into town from major metropolitans such as New York, Boston, and as far as the southwest of Europe.
The annual meeting reflected Harpoon’s ambition to be a bridge builder between Silicon Valley, America’s military ecosystem and dealmakers at the Pentagon. It gathered more than 50-plus investors and founders for its annual meeting which took place on the 32nd floor of the Manchester Grand Hyatt, overlooking San Diego.
Becoming a Recognized VC Firm
Founded in 2018, Harpoon started with $3 million for its first fund, raised $60 million for its second, and recently raised $125 million for its third fund. The firm is backed by Andreessen Horowitz veteran Peter Levine and former Olympic swimmer Michael Phelps, and the Illinois Municipal Retirement Fund, among others.
Harpoon has deployed millions of capital, well before defense tech became the hot category it is today. It has made 28 startup investments to date, mostly investing in tech startups building in large commercial markets with the U.S. government.
In an SDUT interview, the founder Larsen Jensen broke down the area of focus for the firm, he described the thesis to be “commercial first.” Harpoon Venture’s total assets under management are among the largest of those in the San Diego market, joining other tech-focused VCs Section 32 and Anzu Partners.
Despite being the largest defense tech investment firms based in San Diego. It has largely remained under the radar from mainstream media, however that has changed since announcing the close of its third fund.
Being Early to Defense Tech’s Movement
Founded by Larsen Jensen, the General Partner. Mr. Jensen who saw the rise of defense tech before almost everyone else in Silicon Valley.
It was during his time working as a summer associate at A16z and working as a partner at Lightspeed, Larsen began to lay the groundwork for the defense tech investment thesis in 2018.
He initially pitched the idea to potential LPs while he was still at Andressen. Shortly after his time at Lightspeed, he decided to go for it in 2018 and eventually launched what is now known as Harpoon — the defense tech-focused VC firm — said Jensen.
In particular, he came up with his own straightforward thesis about how a defense tech startup could work: developing cutting edge defense hardware and software at private market speeds, without the bloated bureaucracies and high cost structure of the big legacy defense contractors.
At that time, defense tech investing stirred up controversy in Silicon Valley. He recalled that there were a lot of conversations in Silicon Valley about whether or not they should fund a company that might make weapons. “Luckily, we came up with the right strategy on the types of companies we back,” said Jensen.
In 2024, the Silicon Valley-based venture capital funds that were once hesitant to touch defense tech, are now promoting their latest deals publicly. For example, A16z hosted its “American Dynamism” summit in January, which featured both Mr. Jensen and Shield AI, co-founder and CEO Ryan Tseng in a fireside chat conversation in front of many of the top investors in the space.
Building out the Harpoon Team
Harpoon recently hired Jacob Windle and Riley Loftus, who joined the firm as investors. Two strategic hires that have been involved in some of the venture world’s most important defense tech deals including Anduril Industries (valued at $8.5 billion) and Shield AI (valued at $2.8 billion).
Mr. Windle, spent twenty years in the U.S. Navy, his professional background includes working as a partner at Gothams, a data analytics platform used for intelligence and counter-terrorism analysis — founded by Austin-based entrepreneur Matt Michelsen.
Michelsen is an advisor to Palantir Technologies and venture capital firm 8VC, a top VC firm which raised a $880 million fifth fund last year to back startups in the government and defense space, according to TechCrunch.
“I got a call from Larsen one day, who told me instead of chasing deals and making them happen on your own … you should work with us at Harpoon full-time and be a part of the Harpoon team,” Jacob Windle told me at the opening reception.
Riley Loftus came to Harpoon after earning his stripes working at Marlin Equity Partners, a $9 billion-dollar-plus private equity firm based in Los Angeles. Joining the firm in 2023, Mr. Loftus has been instrumental at helping source new startups for Harpoon’s portfolio, which touts being an early investor in early-stage tech companies Solugen, Sema4.ai, Astranis, and several others.
This year, Harpoon has made waves in the local community after hosting two packed-out panels events in Downtown San Diego. Encouraged by the success of its recent gatherings, the firm announced they would be hosting another event this summer and looking to bring on a full-time marketing manager sometime this year.
State of the VC Market
The hot topic at the annual meeting was the state of the venture capital and public markets in 2024. The different perspectives reflect the increasingly polarized state of the venture capital business and the varying opinions about the true role of a venture capitalist. The discussions also revealed a rising anxiety amongst VC investors that the current generative AI boom may not deliver strong returns.
Off stage, the most interesting topics of the evening were mostly off-record. I asked several attendees which companies are on track to become the next big defense tech unicorn and who they think will follow the steps of Anduril — a company valued at $12.5B and has become Silicon Valley darling. I also asked whether Shield AI will find continued success after raising a $500 million Series F round in December this year.
During the annual meeting, I sat next to Matt George, who is founder and CEO of Merlin Labs, a Boston-based startup that has raised $130 million to date. Backed by First Round Capital and Google Ventures — the company is working to help make aircrafts more “autonomous.” The early-stage startup has already created “tens of millions,” in value for its customers, which include the U.S. Air Force.
Other speakers included: Ben Schaechter, CEO at Vantage; Sunny Rekhi, CEO at Tarsal; Yaron Singer, CEO at Robust Intelligence; and Sean Hunt CEO at Solugen.
Investing in San Diego and Beyond
After a full day of panels for Harpoon’s annual meeting, founders and investors mingled with Harpoon’s network of military and U.S. government connections over cocktails.
While Harpoon is still relatively new to San Diego, it is starting to make a name for itself in an increasingly crowded space. Plus, with San Diego’s long history as a military town, and growing reputation as a technology town, it is well-positioned to become one of San Diego’s most successful, and respected tech venture capital firms.
“These guys are very different,” said Mike Krenn, president at Connect, who recently announced launching the TL Foundation to provide capital to local startups. “The traditional VC game is about ROI,” or providing a return on the capital for the firm’s investors. “These guys are about impact. These guys aren’t about ‘How much money can we make this year?’” he told me.
San Diego’s defense tech startup ecosystem continues to thrive. The largest companies based in the San Diego area include Cubic Corporation, General Atomics, and Viasat, plus a dozen others.
Anduril, which is headquartered near Costa Mesa in Orange County, also has a small office in North County San Diego, according to a source close to the firm.