The Dual-Use Digest / May 27, 2025

The Weekly Dual-Use Digest for Entrepreneurs, Investors, and Innovators

Author

Gregory Coleman
May 27, 2025

Week in Review

Last week’s headlines weren’t subtle. Russia launched its largest drone and missile assault on Ukraine since the war began — a clear message that the battlefield is far from quiet, and President Trump’s public rebuke of Putin suggests a potential shift in the administration’s tone. Meanwhile, tensions in the Indo-Pacific rose as U.S. officials confirmed China has dramatically improved its ability to launch a sudden strike on Taiwan. In the Middle East, Netanyahu reopened the Gaza aid pipeline — barely — under pressure from Washington as the Trump administration works to thread a diplomatic needle while simultaneously cutting deals across the Gulf. On the home front, the President pledged to complete a $175 billion “Golden Dome” missile defense shield during his term, the Pentagon lost patience with ULA’s rocket delays, and DoD formally embraced a shift toward smaller, more secure AI models that can operate at the edge.

In the markets, fiscal strain is finally catching up with Washington. Treasury yields climbed above 5% as investors digested a weak 20-year bond auction and the long-term impact of the expansive tax-and-spend bill. Europe secured a short-term reprieve from tariffs, but the broader trade dynamic remains fragile. College grads entered what economists are calling a “freezing” labor market — a possible early indicator of a broader labor shift. Still, innovation continued to push forward: both Air Force Collaborative Combat Aircraft (CCA) prototypes entered ground testing, Anthropic’s Claude 4 models advanced the state of reasoning AI, and Big Tech bet big on nuclear fission to power the AI future. From energy to autonomy to defense manufacturing, the message is consistent — the capital environment may be tighter, but the national security mission is opening doors. If you’re building where the market meets the mission, now’s the time to lean in.

Geopolitics

What Happened: Russia launched its largest aerial assault on Ukraine since the war began, deploying over 350 drones and at least nine cruise missiles across multiple Ukrainian cities, including Kyiv. The attacks resulted in at least 12 civilian deaths and significant infrastructure damage. President Trump condemned Russian President Vladimir Putin as "absolutely CRAZY!" for the escalation and criticized Ukrainian President Volodymyr Zelensky's rhetoric, suggesting it hindered peace efforts.

Why We Care: This war doesn’t appear to be ending anytime soon. Trump’s public opinion of Putin seems to be shifting right in front of our eyes. If this trend continues, we may see a shift in the administration's position on the war in Ukraine and its support philosophy. Secretary of State Marco Rubio even indicated that sanctions against Russia may be in play. We’ll have to wait to see how this plays out. The conflict has served as a classroom for the West and has provided a front-row seat into the current reality and near-term future of warfare, and it appears that the lessons will continue for now at the expense of many lives.

What Happened: U.S. and allied officials report that China has significantly enhanced its capability to launch a sudden attack on Taiwan, citing accelerated air and naval operations, new artillery systems, and improved logistics. Specifically, the expanded combat radius of new fighter jets is changing the operating environment. These developments have raised concerns about Beijing's intentions and the potential for a rapid escalation in the Taiwan Strait.

Why We Care: China remains the pacing challenge of the United States. While many cite China’s pending demographic collapse as something that will lead to the country’s decline, that same pending demographic challenge may also remind Xi Jinping that his country’s ability to move on Taiwan has a shelf-life. There is a very real scenario where the PLA takes a use-it-or-lose-it approach and attempts to take Taiwan before 2030. The U.S. has to continue to monitor this window, be prepared to respond, and also acquire and deploy the capabilities that would allow it to win if forced to fight.

Netanyahu says ‘minimal’ aid will go to Gaza to preserve U.S. support - Washington Post

What Happened: Israeli Prime Minister Benjamin Netanyahu announced the resumption of "minimal" humanitarian aid to the Gaza Strip amid intensifying military operations, acknowledging that mass starvation could lead to a loss of U.S. support. This marks the first public admission by Israel of the worsening humanitarian crisis, with the United Nations and aid groups reporting severe shortages of food and medicine. Aid was cut off on March 2, reducing deliveries of essential supplies. Netanyahu emphasized that the aid would not benefit Hamas and would be distributed through a U.S.-backed mechanism, bypassing the U.N. Efforts are ongoing to resume limited aid deliveries despite continued Israeli shelling and logistical challenges.

Why We Care: Taken in the context of the broader Middle East, and in light of recent deals made with Gulf countries like Saudi Arabia and Qatar, we have to wonder if we’re seeing the very early stages of a complete reshaping of our foreign policy in the region. Netanyahu’s government is increasingly at odds with the West in how it wages war in Gaza, and more and more, we’re seeing countries like Britain, France, and Canada condemn Israel’s actions and decisions, with no signs of Netanyahu’s government reversing course. This entire region is one to keep our eyes on, less because of a threat to America but more for the geopolitical and financial developments that could impact the U.S. defense industry.

Finance

Europe Secured a Tariff Delay From Trump, but Can It Now Make a Deal? - New York Times

What Happened: President Trump postponed a 50% tariff on European Union imports until July 9, following a conversation with European Commission President Ursula von der Leyen. The extension will give both sides time to negotiate a potential trade agreement and avoid a broader conflict. While the move was welcomed by markets, it underscores the persistent strain in U.S.-EU trade relations.

Why We Care: We may be seeing some tactical flexibility and broader strategic recalibration in U.S. trade policy. The extension offers short-term breathing room, but it also signals that geopolitical risk is an increasingly material factor in operational and funding decisions across industries. Many dual-use technologies rely on cross-border collaboration and procurement, meaning even temporary policy shifts can reverberate through timelines and cost structures. Stakeholders should consider resilience not just in technical design but also in geopolitical posture.

What Happened: The recent surge in U.S. Treasury yields is a direct response to escalating concerns over the nation's fiscal trajectory. A lackluster auction of 20-year bonds, coupled with the passage of the expansive tax-and-spending bill, has intensified investor apprehension. This bill is projected to add trillions to the national debt over the next decade, exacerbating fears of unsustainable borrowing levels. Consequently, the 30-year Treasury yield has climbed above 5%. This uptick in yields reflects the market's demand for higher compensation amid perceived fiscal risks.

Why We Care: The bond market's reaction serves as an indicator of the broader economic environment. Rising yields can lead to increased borrowing costs, affecting both public and private sector financing. This environment may prompt a reevaluation of investment strategies, particularly in sectors sensitive to interest rate fluctuations. These rate changes have downstream impacts that are felt by venture capital and private equity investors, and ultimately by the companies they invest in. Investors and entrepreneurs should closely monitor these developments, as they may necessitate strategic adjustments to navigate the evolving financial landscape.

What Happened: New U.S. college graduates are confronting a challenging job market as economic uncertainties lead businesses to scale back hiring plans. Economists describe the current labor market as "freezing," with reduced opportunities across various sectors. This downturn is attributed to factors such as inflationary pressures, shifting monetary policies, and geopolitical tensions that have made companies more cautious in their recruitment strategies. Some economists are warning that this could be an early sign of trouble for the broader labour market.

Why We Care: This development signals potential shifts in talent acquisition and workforce planning. The surplus of skilled graduates entering a tight job market may present opportunities for startups and emerging tech firms to attract top talent that might otherwise be absorbed by larger corporations. Additionally, government agencies focused on innovation and defense could leverage this talent pool to bolster their ranks with top talent.

Defense & Policy

What Happened: President Trump has announced plans for a $175 billion "Golden Dome" missile defense shield, pledging its completion during his current term, even though many of the enabling technologies do not yet exist in a mature enough form for fielding. The initiative aims to enhance national security by providing comprehensive protection against missile threats. Details regarding the project's scope, timeline, and technological specifics remain limited. U.S. Space Force General Michael Guetlein has been named to lead the project.

Why We Care: While this program has skeptics, it represents a gigantic and ambitious technological investment. Many of the technologies required to pull this off do not exist yet and will be created by startups and legacy primes. Sensing, AI, and directed energy technologies will all need substantial investment and advancement, representing a tremendous opportunity for the companies that can get these capabilities to a mature enough state for fielding. This program will also likely impact government spending for the remainder of the Trump presidency.

What Happened: The Pentagon has expressed growing frustration with United Launch Alliance (ULA) over persistent delays in its Vulcan Centaur rocket program, which has postponed multiple national security missions. Despite achieving certification in March 2025, Vulcan's slow transition from the retired Atlas and Delta vehicles has hindered the Space Force's ability to meet key objectives. Major General Stephen G. Purdy criticized the program's performance as "unsatisfactory" and emphasized the need for ULA to "repair trust" and demonstrate greater accountability.

Why We Care: For those unfamiliar, United Launch Alliance, LLC (ULA) is an American launch service provider formed in 2006 as a joint venture between Lockheed Martin Space and Boeing Defense, Space & Security. Our big takeaway is that DoD is becoming impatient with the speed and reliability of some of its legacy providers, highlighting opportunities for emerging companies to fill gaps in national security capabilities.

What Happened: The U.S. Department of Defense is shifting its focus from massive, cloud-based AI models to smaller, more secure large language models (LLMs) that can operate on local systems. This approach aims to enhance data security and operational efficiency by utilizing models trained on specialized datasets without relying on external cloud services. OpenAI, for instance, has collaborated with U.S. national laboratories to develop tailored AI tools for sensitive applications, such as nuclear weapons safety, ensuring that critical data remains within secure environments.

Why We Care: What they’re really talking about here is purpose-built AI at the edge and in shielded environments. And the reality is that there are tons of commercial and enterprise applications that can also benefit from this approach and these sorts of tools. The demand for compact, efficient AI models that can function securely on local hardware opens avenues for developing specialized LLMs tailored to specific defense and intelligence applications, as well as financial and medical applications. Startups and established firms can explore creating domain-specific models that address unique operational needs while ensuring data confidentiality.

Technology

What Happened: Big Tech companies like Google, Microsoft, Amazon, and Meta are investing in next-generation nuclear fission startups to meet the growing energy demands of AI-driven data centers. Startups such as Kairos Power, Oklo, TerraPower, X-energy, and Last Energy are developing small modular reactors (SMRs) and other innovative nuclear technologies. These collaborations aim to provide reliable, carbon-free energy solutions, with some projects targeting operational deployment by the early 2030s.

Why We Care: Just for clarity, this article is talking about nuclear fission, NOT fusion. While nuclear fusion is considered by many to be the Holy Grail of energy production, nuclear fission is based on the same physics as traditional nuclear reactors. These companies focus on providing this energy more cleanly and safely, often in a smaller form factor (SMR). The adoption of SMRs and microreactors offers scalable, low-carbon power solutions essential for supporting AI workloads, defense installations, and critical infrastructure. If you think AI will be one of the most important technological developments of the 21st Century, reliable and abundant energy is the key input into its development. For this reason, many think that the U.S.’s ability to scale energy production is one of the most important tasks facing our society. If we do not increase our energy production, we will not be able to compete globally in the long term.

Both Air Force CCAs now in ground testing, expected to fly this summer - Defense News

What Happened: The U.S. Air Force's two Collaborative Combat Aircraft (CCA) prototypes—the YFQ-42A by General Atomics and the YFQ-44A by Anduril—have entered ground testing and are slated for first flights this summer. These uncrewed, semi-autonomous drones are designed to operate alongside manned fighters like the F-35 and F-47, extending operational reach and performing missions such as strike operations, reconnaissance, electronic warfare, and serving as decoys. The Air Force plans to procure at least 1,000 CCAs to augment its fleet.

Why We Care: We are crossing the chasm from science fiction into reality. The progression of the CCA program signifies a pivotal shift toward integrating autonomous systems into mainstream military operations. These drones' modular design and cost-effective production models, particularly General Atomics' platform-sharing approach with the XQ-67, present opportunities for scalable manufacturing and rapid deployment. Anduril's utilization of its Lattice operating system for autonomous capabilities underscores the growing importance of AI integration in defense technologies. Additionally, the fact that a legacy prime is leading neither of these programs is noteworthy.

What Happened: Anthropic has launched Claude Opus 4 and Claude Sonnet 4, its latest hybrid-reasoning AI models optimized for coding and complex problem-solving. Claude Opus 4, the company's most advanced model, demonstrated autonomous operation for up to seven hours and outperformed competitors like Google's Gemini 2.5 Pro and OpenAI's GPT-4.1 in coding tasks. Claude Sonnet 4, a more cost-effective model, offers enhanced coding, reasoning, and precision, replacing the earlier 3.7 version. Both models introduce features like "thinking summaries" for clearer reasoning insights and a beta "extended thinking" mode to optimize performance. They are accessible via the Anthropic API, Amazon Bedrock, and Google Cloud’s Vertex AI, with Sonnet 4 available to free users and both models included in paid plans.

Why We Care: Not to be outdone by OpenAI’s announcement the previous week, the release of Claude Opus 4 and Sonnet 4 signifies a notable advancement in AI capabilities pertinent to developing software. This is yet another tool that can be used to not only reduce the number of developers a company needs, but to also increase output. Something to note is that the "thinking summaries" feature aids in transparency and auditability, which is crucial for applications that require oversight. The "extended thinking" mode also allows for adaptable performance, balancing speed, and depth of analysis based on your needs.

Notable VC Deals

The AI-native security assurance platform for hybrid enterprises announced it has raised $15 million in strategic funding.

Rhizome, the leading climate resilience planning platform for the power grid, announced the close of a $6.5 million oversubscribed Seed funding round.

Tradeverifyd Inks $12M in Series A Funding - VC News Daily

Tradeverifyd, the supply chain risk management platform, secured $4 million in new funding, which builds on an $8 million Series A round.

Axle Health Secures $10M in Series A Funding - FINSMES

Axle Health, a Los Angeles, CA-based technology company supporting home healthcare operations, raised $10M in Series A funding.