Orlando, Fla. – September 17, 2026 -- Mach Industries doubled its valuation to $3.7 billion in three months, up from $470 million a year earlier, as defense startup funding heads for a record 2026 even while exits remain scarce, according to Backswing Ventures.
Crunchbase data shows 2026 funding at record levels with few exits in sight
Crunchbase News reported this month that 2026 is on pace to be the largest year on record for defense startup funding. Backswing Ventures founder Kyle Asman said that surge is not matched by liquidity, since government sales cycles and dual-use commercial traction can take years to materialize into a sale or IPO.
"Raising money has never been faster in this sector," Asman said. "Turning that money into an exit is a separate problem, and a much slower one."
Carta data shows fewer than 20% of 2017-2018 funds hit 1x DPI
Carta's Q1 2026 State of Private Markets report found that fewer than 20% of venture funds from the 2017-2018 vintage have returned even 1x distributed-to-paid-in capital (DPI) to their limited partners. Asman said paper markups are not cash until a company sells, goes public, or otherwise distributes capital.
Backswing's Fund II surpasses 1.0x DPI in under three years
Backswing Ventures, based in Orlando and focused exclusively on early-stage defense and national security companies, said its Fund II crossed 1.0x DPI in under three years, placing it among the better-performing 2023-vintage venture funds in the country, according to the firm.
The firm's portfolio includes Isengard Industries, which Backswing led financing for to expand munitions manufacturing for allied militaries, and Orion Edge, which raised a $3 million seed round backed by Backswing to bring tactical electronic warfare systems to military and commercial customers. Asman said both raises were sized to specific milestones rather than to set a headline valuation.
Asman cautions founders against pricing rounds off competitors' headlines
Asman said benchmarking a valuation off another company's last raise is a common but risky practice, since a valuation reflects one deal between one company and one set of investors in a given week rather than a market consensus.
"The founders who do well over the next five years probably won't be the ones who raised at the highest number this year," Asman said. "They'll be the ones still standing, and still credible, once the number stopped being the story."
Asman's advice for founders raising now: size the round to reach a specific milestone -- product validation, a government contract, a first paying customer -- and stop there rather than raising against a valuation target.