Ares Industries and the case for a much cheaper cruise missile

When the Center for Strategic and International Studies war-gamed a Chinese invasion of Taiwan in 2023, one result repeated across almost every run: the United States expended its entire inventory of long-range anti-ship missiles in about the first week of fighting. Not degraded it. Exhausted it. The weapons worked, and then there were no more of them, because each one costs millions of dollars and the production lines that build them turn out a few hundred a year.

That finding has haunted defense planners ever since, and it is the problem Ares Industries was started to attack.

Ares is an El Segundo company building low-cost anti-ship cruise missiles for the US military. The founders' pitch is blunt: their missile is ten times smaller and ten times cheaper than the systems in the current arsenal, it works from existing launch platforms, and it can be produced in the volumes a real Pacific conflict would demand. The company came out of Y Combinator's Summer 2024 batch as the accelerator's first weapons investment in nearly two decades of funding startups.

The detail that best captures the company, though, is a schedule. Eleven weeks after Ares was founded, a prototype was flying over the Mojave Desert.

The arsenal math stopped working

The United States builds exquisite missiles. A modern long-range anti-ship missile can find a warship hundreds of miles away, pick it out of a crowded sea, and defeat its defenses on the way in. The trouble is what that costs: roughly $3 million per round for the current generation.

That math was tolerable when the likely targets were a handful of large enemy warships. It collapses against a navy like China's, which fields hundreds of vessels, most of them small and medium-sized ships that do not justify a $3 million answer. Firing the exquisite missile at a corvette is a losing trade. Not firing it means conceding the water.

The war games made the arithmetic impossible to ignore, and the Navy's own behavior since then shows the demand signal is real. The service has started buying cheaper, smaller strike weapons and talking openly about "affordable mass." What has been missing is a supplier base. The large primes are structured around the exquisite end of the market, and their incentives point toward more capability per round, not more rounds.

Ares is betting that the gap between what the Pentagon needs and what the industrial base produces is wide enough to build a company in.

Ten times smaller, ten times cheaper

The Ares missile, as the company described it at launch, weighs around 300 pounds. Coverage of the debut in The War Zone and Interesting Engineering put the target price around $300,000, against roughly $3 million for the incumbent systems. It is sized for the targets the current arsenal overserves: the smaller and mid-sized warships that make up most of a modern fleet.

Shrinking the missile buys more than a lower sticker price. A 300-pound weapon fits where one ten times its size cannot. More rounds fit on a ship, a truck, or eventually a wing station. The company has said early variants will launch from the ground and from ships, with air-launched versions to follow, and that compatibility with existing launchers is a design requirement rather than an afterthought. That last point matters more than it sounds. A cheap missile that demands a new launch system is not cheap; the integration bill eats the savings. A cheap missile that drops into hardware the military already owns can actually be bought in volume.

The 10x cost reduction comes from the same place it always does in hardware: design-to-cost discipline, commercial components wherever they survive the environment, and manufacturing planned for rate from day one. This is the SpaceX playbook applied to munitions, and the comparison is not incidental. Launch coverage framed Ares exactly that way, as an attempt to be the SpaceX of missiles, driving the cost per unit down far enough that quantity becomes a capability of its own.

Eleven weeks from incorporation to the Mojave

The speed is the part of the story that reads like fiction. Jared Friedman, the Y Combinator partner who backed the company, wrote that the team went from starting the company to flying a test missile in 11 weeks. Over the summer of 2024 the founders built multiple prototypes and flight-tested them in the Mojave Desert, then announced the company in August with an actual photograph of actual hardware.

Eleven weeks is an absurd timeline by aerospace standards, where a flight test is normally something that happens years into a program, after the requirements documents and the preliminary design reviews. Two things made it possible. First, the founders had done it before; both came out of previous missile startups and did not need to learn the domain on the company's clock. Second, a test article is not a production weapon, and Ares did not pretend otherwise. The point of flying early was to retire the aerodynamic and propulsion risk while the company was still small enough to iterate weekly.

When it launched, Ares said it planned to deliver working missile systems to its first customers by mid-2025. Whatever the exact shape of those deliveries, the launch-to-flight sprint told customers and investors the thing that actually matters about a new defense company: this team ships hardware.

Founders who had already built missiles

Defense is an unforgiving market for first-timers, and the Ares founding team is notable for not being one.

Alex Tseng, the CEO, was the first engineering hire at a previous missile startup before founding Ares. His background runs through autonomous systems work at Rivian and Stanford and turbojet development at Cal State Long Beach, which is close to the exact skill stack a small cruise missile requires: propulsion, guidance, and the discipline of automotive-style cost engineering.

Devan Plantamura, his co-founder, came to the company from the other side of the problem. He is a veteran of Army psychological operations and Navy combat deployments, and he was previously head of operations and strategy at Mach Industries, another young defense company. He has been the customer the company now sells to, which in defense is worth more than any amount of market research. Knowing how a program office thinks, how a requirement gets written, and which doors in the Pentagon actually open is half the business.

The pairing follows a pattern that runs through the strongest of the new defense startups: one founder who can build the weapon and one who has carried one.

Why Y Combinator crossed the line

YC's investment deserves its own section, because it says something about where the industry has moved.

For nineteen years, Y Combinator funded software companies, marketplaces, biotech, and hardware of every description, and never a weapons company. Ares ended that in August 2024, and Forbes and TechCrunch both covered the decision as news in its own right, which it was. The most influential startup accelerator in the world deciding that munitions are now a fundable category moves the Overton window for every founder and every seed fund watching.

The decision tracks a broader shift. Anduril proved a venture-backed defense company could reach the scale of a prime. The wars in Ukraine and the Red Sea demonstrated, in public, that cheap precision mass beats small numbers of exquisite systems in a long fight. El Segundo, where Ares is based, has filled up with young hardware companies run by engineers who want to build physical things that matter. Ares is all of it at once: a weapons company, in the new defense-tech capital, funded by the institution that defines what Silicon Valley considers a startup.

For Orange Collective, which backs YC companies, the bet rhymes with others in the portfolio like Apollo Atomics and Starcloud. Each takes a category owned by slow-moving incumbents with decade-long development cycles and asks what happens when a small team applies startup iteration speed to it. Ares just happens to be doing it in the category where the stakes are least abstract.

Mass is a capability

The deeper idea under Ares is that quantity has been mispriced.

American defense procurement spent forty years optimizing for capability per round, and it produced the best missiles ever made in numbers too small to matter in a protracted war. The empty-magazine result from the CSIS war game is what that optimization looks like when it meets an adversary with more hulls than the US has rounds. In that world a missile that does most of the job at a tenth of the price is an upgrade, because you can field ten of them.

What Ares is selling is a deeper magazine, not a smarter missile. If the company can hold its cost target at production rate, the Navy gets something it currently cannot buy at any price, which is the ability to keep shooting in week two.

Eleven weeks from a standing start to a missile in the air over the Mojave suggests the team understands that the product is not really the airframe. The product is the production rate, and the clock started in 2024.