The conversation between host Jon Eggins, Managing Director and Head of Portfolio Management at Russell Investments. and Kirsten Bartok Touw, co-founder and managing partner at New Vista Capital, on the Without Boundaries podcast1 covers terrain that most investors only observe from a distance. Bartok Touw operates at the precise intersection where Silicon Valley meets Washington, where defense innovation meets private markets, and where the long arc of technology development meets the urgency of geopolitical competition. What emerges from the conversation is a clear-eyed framework for identifying durable, investable themes in sectors that are evolving faster than conventional capital has yet recognized.
The Defense Industrial Base Is Broken, and That Is the Opportunity
The core argument Bartok Touw makes about defense is structural. The legacy prime contractors, the six giants including Boeing, Northrop Grumman, General Dynamics, and L3 Harris, were consolidated through a deliberate policy choice. She traces the origin to the so-called "Last Supper" of the 1990s, when the Defense Department told industry to consolidate or perish as the post-Cold War peace dividend compressed budgets. The result was exactly what one would expect: monolithic organizations, slow procurement cycles, and cost overruns with no competitive consequence.
The government, she argues, has recognized the problem and is now actively courting what Bartok Touw calls neo primes. These are next-generation companies capable of holding prime contractor status, assembling capability through vertical integration, and competing directly for Department of Defense contracts. "These startups have been incredible," she says. "They're able to move quickly because they are much closer to the customer and they're able to apply R&D money quickly to getting something out."
The contrast with the incumbents is not subtle. "Whether you're IBM or whether you're Lockheed or Northrop, no one moves that fast to get resources applied and then have the ability to go build a prototype for the Department of Defense in a period of three months." The listed defense majors, in other words, do not give investors access to where the real innovation is happening.
Castellion and the Manufacturing Thesis
Bartok Touw grounds the neo prime concept in a specific portfolio holding: Castellion, founded by three SpaceX veterans, which is re-engineering hypersonic missile technology from first principles. The problem it addresses is scale. Legacy primes produce hypersonic interceptors at costs of $30 to $40 million per unit, in volumes of roughly twelve per year. At that cost and cadence, inventory math makes deterrence fragile.
Castellion applied the advanced manufacturing logic SpaceX used to compress rocket costs and applied it to missile systems. The Navy and Army have already begun integrating the company's capabilities into their launch platforms. The analogy Bartok Touw points to, a photo sequence comparing Raptor engine versions one through three and the disappearance of external wiring as manufacturing was internalized, is more than aesthetic. It illustrates a methodology. "They re-engineered it down to the basics. They thought: how can we do this? What should we vertically integrate? And how do we do this so we can make it at scale and volume?"
Space: The Dial-Up Era
On the space side, Bartok Touw is precise about where in the development curve the sector sits. The current architecture, in which data collected in space is transmitted down to Earth via ground stations, processed, and then returned to the user, is effectively a dial-up analogy. "We are ten to fifteen years away from having a full-scale capability" to process data in space and deliver it directly to the end user.
That context matters for capital allocation. Two portfolio companies illustrate the near-term commercial opportunity within the longer arc. Hubble Networks uses Bluetooth technology to enable two-way, high-bandwidth connectivity directly to satellites without hardware modification, creating a path for consumer devices to function as AirTag equivalents without cell tower dependency. The Defense Department's interest was immediate. A second cluster of investments addresses the thermal and photonic challenges involved in transferring energy and data optically rather than via radio frequency, a necessary step toward both high-bandwidth space communications and energy recharge capability.
Time Horizon Discipline
The fund framework Bartok Touw describes is disciplined precisely because it has to be. A ten-year fund life, with five years to deploy and five years to return capital, demands that portfolio companies reach a minimally viable product within two to four years, then scale through years four to eight. "As an obligation we have at the end of life," she says, the time horizon for commercialization is non-negotiable in a fund vehicle. Longer-duration bets on lunar mining or asteroid habitats may be intellectually interesting but are structurally incompatible with the fund model.
What Makes a Fundable Team
On management evaluation, Bartok Touw offers a counterintuitive view. New Vista has found it easier to teach defense domain knowledge to strong operators than to teach startup scaling to defense insiders. The ideal founding team combines someone who has scaled a business, a deep technical expert suited to hardware-software integration, and someone who understands how to sell to and build trust within the Department of Defense. That trust, she emphasizes, is not transactional. "It really is an organization in which you have to build that trust and credibility over time."
Five Key Takeaways for Advisors and Investors
- The listed defense majors are not a proxy for defense innovation. Neo prime companies are capturing the next generation of defense contracting, and they are not yet publicly accessible. Private markets are the access point.
- Manufacturing discipline is as important as technology. Castellion's value is not just that it builds hypersonic missiles, but that it can build them at scale, at lower cost, through advanced manufacturing. Cost per unit and production volume are the metrics that matter strategically.
- Space is early innings. The current satellite architecture is analogous to dial-up internet. The investment opportunity lies in building the tech stack incrementally, with a realistic understanding that full capability is a decade or more away.
- Dual-use technology compounds the investable opportunity. Companies like Hubble Networks and Chariot Defense serve both commercial and defense markets, broadening their total addressable market and reducing single-customer dependency.
- Time horizon discipline is essential. In private market defense and space investing, the fund structure itself is a binding constraint. Advisors evaluating these strategies should confirm that portfolio construction reflects realistic commercialization timelines, not aspirational ones.
Footnote:
1 Eggins, John, Russell Investments. "Kirsten Bartok Touw, New Vista Capital." Without Boundaries, Russell Investments, 2025, https://russellinvestments.com/content/ri/ca/en/insights/without-boundaries-podcast.html.
