Stories of Technology, Innovation, & Entrepreneurship in the Southeast

Veteran Ventures Capital (VVC), a venture capital firm investing in dual-use national security technologies that was founded in Knoxville before relocating to McLean, VA in April 2024, announced the final close of Veterans Fund II at $60 million, oversubscribed with strong investor demand. Across both funds, VVC-backed companies have already secured more than a quarter of a billion dollars in non-dilutive government funding, clear evidence of the capital efficiency and impact of the firm’s model.

The new fund is triple the size of VVC’s inaugural $20 million Fund I and positions the firm to accelerate mission-critical innovations at a moment of historic opportunity for the defense and aerospace sectors.

Fund II drew strong support from institutional investors—including the Virginia Innovation Partnership Corporation, the State of Tennessee, and university endowments—alongside Hersh Family Investments, VVC’s anchor investor, prominent family offices, and leading wealth management firms. This diverse Limited Partner base reflects deep confidence in VVC’s differentiated model: sourcing and scaling mission-critical, veteran-led companies; leveraging our team’s unmatched blend of defense, operational, and venture expertise; and unlocking substantial non-dilutive government capital. In Fund I alone, 14 portfolio companies secured more than $180 million in non-dilutive funding—a greater than 10-to-1 leverage ratio—demonstrating how our approach drives both national impact and compelling investor returns.

U.S. defense spending has reached record highs—more than $900 billion in FY2025, with $145 billion allocated to research, development, test, and evaluation. VVC also cites additional data, such as:

1. Budgets are expected to keep rising, driven by priorities in unmanned systems, artificial intelligence integration, and the rapid fielding of advanced hardware solutions.
2. PricewaterhouseCoopers reports that investment in space is also surging, as national security priorities converge with commercial opportunities—accelerating innovation across the sector.
3. Capital markets are reflecting this momentum.
4. Recent acquisitions and successful public offerings underscore a robust exit environment in the very sectors VVC targets.

For VVC and Fund II, these forces translate into a rapidly expanding addressable market and an urgency to deploy solutions faster. As defense and aerospace agencies commit greater resources to modernization, demand is surging for exactly the kind of dual-use, mission-critical technologies we back—especially in space situational awareness, in-space propulsion, counter-UAS, and autonomous systems.

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