Reddit backer funds weapons start-up focused on ‘budget missiles’

Start-up incubator Y Combinator, which has backed companies such as Airbnb, Reddit and Coinbase, has made its first ever investment in a weapons company, which plans to produce “budget missiles” for the US military.

Ares Industries, which is based in California, aims to produce “smaller, less expensive cruise missiles” for the US Department of Defence (DoD).

The weapons manufacturer fashions itself as the Space X of the military world, attempting to break into the US military-industrial complex.

Co-founders Devan Plantamura and Alex Tseng argued that with the US quickly approaching a shortage of missiles, it was not worth restocking the supply by spending more than $3m on a single missile that can weigh over a tonne.

Instead, Ares planned to “deliver the capabilities that the DoD wants in a form factor that’s 10x smaller and 10x cheaper” said Plantamura and Tseng, who previously worked at other weapons start-ups before founding the company three months ago.

The pair said the company had been testing prototypes of their missiles in the Mojave Desert, with plans to deliver a working missile system by the middle of next year.

This is Y Combinator’s first ever backing of a weapons manufacturer, having become one of the core funders of tech start-ups over the last 20 years.

Traditionally, it has backed companies like software start-ups, e-commerce firms and financial technology companies.

However, Y Combinator CEO Garry Tan was an early employee at Palantir, a data analytics company that frequently works with the US military.