• Ares Industries wants to make smaller and cheaper anti-ship cruise missiles.
  • YC partner Jared Friedman says the company could do for missiles what SpaceX did for rockets.
  • Friedman says the missile startup's work could be critical if China were to wage war on Taiwan.

Startup accelerator Y Combinator is backing its first weapons startup — a firm that says it can make missiles smaller and cheaper than its competitors.

"Ares is building a new class of anti-ship cruise missiles. We are going to deliver the capabilities that the DoD wants in a form factor that's 10x smaller and 10x cheaper," Ares Industries' cofounders Devan Plantamura and Alex Tseng wrote in a post on the YC website.

The pair had worked in other defense startups before teaming up to found Areas Industries in May this year.

Ares Industries, YC partner Jared Friedman said, could prove critical if China attacks Taiwan.

"While the world is focused on conflicts in Ukraine and the Middle East, the world is much closer to a war in the Taiwan Strait than most people realize," Friedman wrote in an X post on August 20.

"In a war with Taiwan, we would fire thousands of anti-ship missiles a week, and our stockpiles would run out in days. The ability to produce enough missiles to be competitive is the best way to deter a war," he continued.

The investment in Ares Industries marks the first time YC is taking a stake in a defense startup.

The famed startup accelerator is better known for its picks in the software space, with companies like Airbnb, DoorDash, Dropbox, and Reddit among its top picks.

But Friedman has high hopes for the young weapons maker. Ares Industries, he says, could do for missiles what Elon Musk's SpaceX did for the rocket industry.

"When SpaceX entered space launch vehicles in 2002, Lockheed Martin and Boeing had formed a duopoly. Similarly, Lockheed Martin and Raytheon are the only two big players that supply cruise missiles today," he wrote on X last week.

"And just like when the ULA made all the space launched rockets, the missiles these companies make have become bloated by years of cost-plus and no-bid contracts," he added, referencing the joint venture between Lockheed Martin and Boeing.

In their post on the YC website, Plantamura and Tseng said they'd spent the summer building and testing multiple prototypes.

"In 11 weeks, we went from starting the company to flight testing with our own design. We are on track to deliver early working missile systems to our first customers by mid-2025," they wrote.

Representatives for Ares Industries and YC did not immediately respond to requests for comment from Business Insider sent outside regular business hours.

To be sure, YC isn't the only Silicon Valley outfit trying to disrupt the defense sector.

Former Google CEO Eric Schmidt said in a lecture at Stanford University in April that he was working with Udacity CEO Sebastian Thrun to mass-produce drones for Ukraine's ongoing war with Russia.

"Because of the way the system works, I am now a licensed arms dealer," Schmidt said during the lecture, which was briefly posted on Stanford's YouTube channel this month before it was taken down.

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