Army of expertise and skills lost in the transition

[as published in The Australian 28/4/2026]

Each year, as Anzac Day comes around, we remind ourselves that the freedoms we enjoy were secured by people who operated in dreadful conditions most of us will never have to experience. And then we move on.

We rarely consider what happens next to the people who carried that burden. Not in the abstract sense of “transition”, but in the specific, economic sense of where their judgment, training and experience end up.

Australia’s investment funds are missing a trick. What walks out of the Australian Defence Force each year is a reservoir of applied knowledge about how systems perform under pressure, how technology fails, and what capability looks like when it matters.

At the same time, Australia is attempting to build a defence innovation ecosystem of some consequence.

The Advanced Capabilities Investment Fund, with up to $500m in public capital matched by private money to reach $1bn, is the clearest signal yet that the federal government understands the need to mobilise capital at scale.

Alongside it, the Advanced Strategic Capabilities Accelerator is trying to accelerate how ideas move from concept to capability.

The intent is sound, but the missing piece is who actually deploys that capital.

In the United States, the firms that shape defence investment are not generalists who have wandered in from adjacent sectors. They are built around people with visceral military experience: pilots, intelligence officers, special operations commanders.

They treat defence as a domain with its own logic, failure modes and definitions of success. Capital allocation decisions are informed by people who understand what works beyond a pitch deck and, more importantly, what fails when it matters.

In contrast, Australia has a growing pool of capable investors being asked, implicitly, to step into a domain where the cost of shallow understanding is not merely financial.

Some will build credible theses, but without deep operational grounding, the business and sovereign risks are obvious: defence expertise is not a simple thematic overlay.

The Australian Strategic Policy Institute has already warned that ACIF risks becoming little more than a cheque. For me, that is a reflection of the human capital problem at its core.

The good news is that the expertise we need already exists, at scale, inside the ADF. Thousands of Australians leave the military each year having operated complex systems, managed risk in real time, and made decisions with consequences that cannot be deferred.

They understand capability in a way that no investment committee can reverse-engineer. They know the difference between a technology that demos well and one that works on the battlefield. Yet we do almost nothing to connect that knowledge to capital.

There is a fantastic opportunity for both the public and private sectors to respond. Transition programs can be redesigned to include direct pathways into venture firms, investment funds and capital allocation roles.

Exposure to financial markets can happen before personnel leave the ADF, while their operational experience is still current. Skills in structuring investments, assessing commercial risk and allocating capital can sit alongside the judgment they already possess.

At present, much of this knowledge flows into consulting firms, large defence primes and advisory roles. It may be useful but none of it is pointed at what gets funded, what gets built, and which companies survive long enough to matter.

It is not enough to assemble funds and assume outcomes will follow. Capital allocation in this domain requires military fluency, operational judgment and an understanding of how capability performs on the battlefield.

Without it, the system will favour what is easy to explain rather than what is necessary, and we will end up with better-funded irrelevance.

The capital that does exist is often disconnected from the expertise required to deploy it effectively

For all the discussion of sovereign capability, the human infrastructure required to support it remains underdeveloped. Less than one in 10 superannuation funds invests in defence. The capital that does exist is often disconnected from the expertise required to deploy it effectively.

We must create deliberate pathways for ADF personnel to enter private capital before they leave service.

Embed them within venture firms and build secondments and fellowships that develop financial literacy alongside operational expertise. Ensure that those making capital allocation decisions in national security have seen capability deployed in the field.

At the same time, remove the lingering ambiguity around defence as an asset class. Provide clear signals that investing in the systems that defend the country sits within the responsibilities of a mature financial system.

Australia now has some credible policy signals in ACIF and ASCA. We have companies building world-class technology, and we have the people with the experience to make sense of its potential. What we lack is a pipeline that connects them.

Anzac Day asks us to remember those who served. This year, it should also prompt a more practical question: Are we prepared to back them to help deliver the next phase of Australia’s sovereign capability?

That is the pipeline we owe them.

Steve Baxter is founder and CEO of specialist defence technology venture capital firm Beaten Zone Venture Partners.