The business of military contracting is booming in Southern California.
The total value of defense contracts won by companies in Los Angeles County more than doubled in the last 10 years after adjusting for inflation, according to an analysis by CalMatters and The Markup. In the same period, the defense budget rose by about 19% in adjusted dollars.
The $15 billion in contracts won in L.A. County last year went largely to old-school defense contractors with headquarters elsewhere, like Boeing. But startups claimed a growing share of the pie, selling defense systems like low-cost missiles, drones, surveillance satellites, AI tools and much more. In 2025, 10 startups in the L.A. area were crowned “unicorns,” becoming companies valued by investments at more than $1 billion, according to the Los Angeles Business Journal. Most of those 10 companies were aerospace or defense businesses.
In 2015, 14 of the top 100 defense contracts won in California went to businesses focused on drones or space, according to the CalMatters and Markup analysis. By 2025, that share was up to 21. The shift is similar if measured by dollars, from 13%to 18%.
Details like whether you count obligations for where businesses are based or where the projects are launched all affect those numbers. By some counts the increases in contract dollars could be larger.
The contracts have been kindled by a surge of venture capital. Private investment in aerospace and defense since 2008 has fueled massive gains, according to a report from The Aerospace Corporation, a federally-funded nonprofit.
But all the new money is now causing awkward political tensions.
The war in Iran, which has depleted American munitions, is poised to drive demand even higher. The Trump administration’s latest budget proposal includes a record-setting $1.5 trillion for the military. Meanwhile, the Defense Department has signed off on the earliest contracts for the “Golden Dome,” a proposal to build a missile-defense system above the United States that may eventually cost hundreds of billions of dollars.
Most of the Golden Dome winners are based in or have ties to the Southern California area.
“You saw this huge rise in capital and now you're seeing just much, much bigger government budgets for space,” said Sam Wilson, a researcher at the Aerospace Corporation.
The collision of venture capital and military spending has alarmed some advocates, who see a frightening trend toward privatization and the risk of a space arms race. Even Congressional Democrats are pushing back against the spending.
That’s noteworthy because it has tended “to be a bipartisan, equal effort to increase the budget” of the military, said Lindsay Koshgarian, director of the National Priorities Project, which tracks defense spending. “I think we are maybe seeing the limits of that now.”
Despite the pushback, some of the congressional districts that saw the largest defense contract increases in recent years are beneficiaries of signature Trump-era projects. Many are in solidly blue Los Angeles County, and among the most Democrat-leaning districts in the country.
California’s 36th Congressional District includes El Segundo, a high-tech defense hub outside Los Angeles. In the district’s 2024 House race, incumbent Democrat Ted Lieu took nearly 70 percent of the vote over a Republican challenger. The increase in defense contracts between 2015 and 2025 in that district alone was more than $3.3 billion.
Another district, California’s 43rd, is represented by Maxine Waters, who in 2021 signed on to the proposed No Militarization of Space Act, which described the Space Force as an unnecessary waste of resources and sought to abolish it.
Trump recently proposed to double the budget of the Space Force, another potential boon to the area. Meanwhile, Waters’ district has seen its share of obligated defense department spending grow over the last decade by more than $1.6 billion, or more than 500%, adjusted for inflation. Waters’ office didn’t respond to a request for comment.
Seamus Daniels, who studies the defense budget at the Center for Strategic and International Studies, said the proposed $1.5 trillion dollar defense budget for fiscal year 2027 “would surpass the peak of defense spending during World War II.”
The administration is seeking that money in place of traditional Democratic priorities, like healthcare funding, he points out. “The budget requests of the second Trump administration have been contentious because, while they have sought to increase defense spending dramatically, they're also aiming to cut non-defense spending,” Daniels said.
Koshgarian said Democrats have largely been open to an increased defense budget, especially if it brings money to their congressional districts. But that may be changing.
“That tension is definitely real, even in left districts,” she said. “But I think we're reaching a level of extremity now that that might be starting to flip.”
A new chapter
There’s no question California has become a major player in defense technology.
Every year, the Silicon Valley Defense Group, an industry nonprofit promoting military technology, releases a list of the top 100 tech-forward national security companies. When they charted the companies’ headquarters by state for 2026, they found that 47 were based in California, more than five times those in the number two state, Colorado.
It wasn’t always that way for California.
The state became a hub of manufacturing during World War II, building the planes en route to the Pacific Theater. During the Cold War, it was home to pioneering aerospace firms like Lockheed, Northrop, and Convair. But by the 1990s, the collapse of the Soviet Union gutted defense spending and consolidation stripped the region of its leadership, eventually sending Lockheed Martin’s headquarters to Maryland and Northrop Grumman’s to Virginia. Many were sounding the industry’s death knell. The nonprofit RAND Corporation noted that military aerospace sales peaked in 1987. They had declined by 32 percent just six years later.
The seeds of a comeback were sown when the Predator drone, built by General Atomics of San Diego, first took flight above the California desert in 1995. The craft, armed with Hellfire missiles, became the symbol of the War on Terror.
Then came the private investment surge, and an administration with new priorities.
As far back as the first months after Trump’s first inauguration, in 2017, aerospace industry
investors were celebrating massive stock gains. Government contracts have since turned defense companies like Costa Mesa-based Anduril into multi-billion-dollar operations.
Venture capital meets military dollars
Southern California likely benefits from the fact that the Space Force’s seed funding arm is based in El Segundo, where it decides where to send hundreds of millions of government dollars. The arm often chooses to fund companies in or around the small, seaside city, which has built buzz as ground zero for defense tech.
When Defense Secretary Pete Hegseth recently went on tour to promote the "Arsenal of Freedom," a plan to massively increase munitions building, he told the workers at a Long Beach company, Rocket Lab, that “dominance of space” was key to the military’s future.
“This company, you right here, are front and center, as part of ensuring that we build an arsenal of freedom that America needs,” he said.
The partnership between private venture dollars and public defense contracts often unfolds like this: First, a startup comes up with a business plan for a product or service with military applications.
SpaceWERX, the El Segundo-based Space Force venture arm, selects some of these projects for early seed funding. Since 2021, SpaceWERX has awarded 380 contracts worth more than $461 million to businesses in California, more than any other state, SpaceWERX spokesperson Matthew Clouse said.
Private investors often follow on, seeing SpaceWERX money as a “demand signal,” said Arthur Grijalva, director of SpaceWERX. Billions have flowed into California-based companies in recent years this way.
Some local politicians have spent years pushing for similar investment in local military applications. El Segundo Mayor Chris Pimentel said he and his team traveled north in the state to personally court financiers while dealing with an enormous business dip early in the pandemic.
“It really paid off with large dividends,” he said. “We started showing up and being in the room with some of the larger venture funds and saying, ‘we can make these things happen down here. We can build stuff.’"
“Agnostic of politics and agnostic of individual ideologies, our core belief is that this is where the future has been made historically,” he said, pointing to Southern California’s long aviation history.
Some companies that take Defense Department contracts, like Elon Musk’s SpaceX, which started in the Los Angeles area, are now valued at billions. SpaceX's recent initial public offering became, by far, the biggest IPO of all time in June.
Other small space companies are rapidly building with government contracts. True Anomaly, a space defense company, was founded in Colorado in 2022 but now has its largest office in Long Beach. “When you're building this type of company, it's frankly somewhat of a necessity to have a footprint here,” said Chief Financial Officer Mark Seidel.
The company has worked on Space Force missions and was recently announced as a contractor for the Golden Dome project. In April, a $650 million funding round put the company at a valuation of more than $2 billion.
The increasing spending, while bringing jobs to some parts of the country, continues to rile critics.
“We very much risk getting into a space arms race, where China invests more, so we invest more so China invests more and we invest more,” Koshgarian said. “Where does it stop?”
Data from usaspending.gov for Defense Department obligations to organizations listing a California address. Awards may be to California businesses for projects in another area. Download our data here.
Mohamed Al Elew contributed data editing to this report.
This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.
