Ares Industries launched on Tuesday, promising to make missiles that can take out ships hundreds of miles away, but that are 10-fold smaller and cheaper than what’s currently available.

“A war with China in the Taiwan Strait would look nothing like what we’ve seen in Ukraine or the Middle East,” founders Devan Plantamura and Alex Tseng wrote in a post. “War games within DOD [the Department of Defense] and military experts are in agreement that the most useful weapons in such a conflict would be long-range anti-ship weapons or cruise missiles.”

In the event of a war, the stockpile of U.S. missiles would be depleted within weeks, and there isn’t enough industrial capacity to build them at a sufficient pace, they warned.

But $3 million missiles weighing 3,000 pounds aren’t necessary to sink smaller Chinese warships, not to mention swarms of $200,000 unmanned surface vessels, Plantamura and Tseng added.

“The DOD needs smaller, less expensive cruise missiles, and lots of them! But no one has delivered on that promise yet,” they said.

Ares built multiple prototypes and flight-tested them over the summer in California’s Mojave Desert. The founders said they are on track to deliver “early working missile systems” to their first customers by mid-2025.

Ares and Y Combinator did not immediately respond to requests for comment.

In a series of tweets, Y Combinator partner Jared Friedman explained some of the reasoning behind the incubator’s inaugural dive into the defense industry.

“There are two forces in the world that make this a particularly good idea now: The current missile producers have become bloated and can’t meet demand, and drone ships mean we need smaller missiles,” he wrote.

Friedman then compared today’s dominant missile makers to the companies that dominated the rocket business more than 20 years ago, when Elon Musk started SpaceX.

By developing reusable launchers, SpaceX dramatically lowered the cost of reaching orbit and is now the leading space-launch company. In fact, NASA just turned to SpaceX to bring back astronauts from the International Space Station after malfunctions on Boeing’s Starliner capsule.

“When SpaceX entered space launch vehicles in 2002, Lockheed Martin and Boeing had formed a duopoly,” Friedman wrote. “Similarly, Lockheed Martin and Raytheon are the only two big players that supply cruise missiles today.”

While Silicon Valley and the venture capital community had long kept their distance from the defense sector, Russia’s invasion of Ukraine in 2022 helped spur more interest.

Between 2021 and 2023, investors funneled $108 billion into defense tech companies, the Washington Post reported in February, citing PitchBook data. Meanwhile, data mining company Palantir and defense tech startup Anduril have also created more buzz in the sector.

During a July 17 panel at the Fortune Brainstorm Tech conference in Park City, Utah, investors also noted the rise in U.S. nationalism and the growing conservatism in Silicon Valley.

“Definitely we’re seeing a trend towards conservatism, and I think this is one of the reasons why investing in defense technology is no longer taboo,” Jenny Xiao, a partner at Leonis Capital, said.