Vulcan Elements, a small rare earths startup backed by Donald Trump Jr.’s 1789 Capital, secured a $620 million loan from the U.S. Department of Defense. This funding, part of a $1.4 billion initiative, aims to boost domestic rare earth magnet production for military applications, highlighting growing federal support for strategic tech firms.
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Vulcan Elements received $620 million in Pentagon financing, the largest from the Office of Strategic Capital to date.
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The deal includes partnerships with ReElement Technologies to manufacture magnets for defense systems like drones and submarines.
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1789 Capital, managing over $1 billion, invested in Vulcan’s Series A, amid a pattern of federal contracts for its portfolio companies totaling over $735 million this year.
Discover how Vulcan Elements’ $620 million funding from the Pentagon, linked to Trump Jr.’s 1789 Capital, strengthens U.S. rare earth supply chains. Explore implications for defense and investments—read now for key insights.
What is Vulcan Elements’ $620 Million Funding Deal?
Vulcan Elements’ $620 million funding comes from the U.S. Department of Defense’s Office of Strategic Capital, marking the largest such financing to date. Finalized last month, it supports a $1.4 billion package to develop domestic production of rare earth magnets essential for military hardware. In partnership with ReElement Technologies, Vulcan will focus on creating a secure supply chain, reducing reliance on foreign sources and enhancing national security.
This initiative addresses critical vulnerabilities in the rare earths sector, where the U.S. has historically depended on imports for over 80 percent of its needs, according to data from the U.S. Geological Survey. The funding also incorporates over $550 million in private investments and additional federal backing, including a $50 million equity stake from the Commerce Department and warrants for the Pentagon in both Vulcan and ReElement.
How Does 1789 Capital’s Involvement Tie Into This Funding?
1789 Capital, a venture firm co-founded by Republican donors Omeed Malik and Rebekah Mercer in 2023 and where Donald Trump Jr. serves as a key partner since 2024, led Vulcan Elements’ $65 million Series A round in August. The firm, now overseeing more than $1 billion in assets, has diversified its portfolio to include sectors influenced by policy shifts, such as defense technology and cryptocurrency.
At least four of 1789 Capital’s portfolio companies have received federal contracts this year, amounting to over $735 million. For instance, Cerebras Systems secured a $45 million Pentagon agreement, while PsiQuantum and Firehawk Aerospace each obtained over $10 million from the U.S. Air Force. Vulcan’s deal stands out as the most substantial, underscoring a trend of government support for firms aligned with strategic priorities.
According to Chris Buskirk, co-founder of 1789 Capital, the firm plans to participate in Vulcan’s next funding round, emphasizing long-term commitment to critical materials innovation. This involvement extends 1789’s reach beyond its initial focus on anti-woke initiatives into areas like crypto, where the Trump family has reportedly earned over $1 billion in payouts in the past year, benefiting from eased digital currency regulations under the current administration.
The firm’s stakes in companies like Anduril and SpaceX further illustrate its entwinement with federal opportunities, as these entities continue to win government deals. In October, Unusual Machines, where Donald Trump Jr. held a multi-million-dollar stake, finalized its largest-ever Pentagon contract, adding to the pattern of successes for 1789-backed ventures.
Frequently Asked Questions
What Role Does the U.S. Department of Defense Play in Vulcan Elements’ Funding?
The U.S. Department of Defense provided the $620 million loan through its Office of Strategic Capital to Vulcan Elements and ReElement Technologies. This financing supports the production of rare earth magnets for essential defense applications, including weapons systems, aircraft, satellites, drones, and submarines, ensuring a robust domestic supply chain.
How Has 1789 Capital Benefited from Federal Contracts in 2025?
In natural terms, 1789 Capital has seen several portfolio companies secure over $735 million in federal contracts this year, including Vulcan Elements’ major loan. This reflects strategic investments in defense and tech sectors that align with administration priorities, such as strengthening supply chains and advancing innovative technologies for national security.
Key Takeaways
- Strategic Defense Investment: The $620 million funding to Vulcan Elements highlights the Pentagon’s push to onshore rare earth magnet production, vital for military hardware and reducing foreign dependencies.
- 1789 Capital’s Growing Influence: With investments in 22 companies and multiple federal wins totaling over $735 million, the firm demonstrates success in sectors like defense and crypto amid policy favorable to its backers.
- Addressing Conflicts of Interest: While officials deny any undue influence, experts urge vigilance to maintain transparency in government dealings with politically connected ventures.
Conclusion
Vulcan Elements’ $620 million funding deal, backed by 1789 Capital’s involvement, represents a pivotal step in fortifying the U.S. rare earths supply chain for defense needs. As 1789 Capital expands its portfolio across critical areas including crypto investments, this transaction exemplifies how federal initiatives intersect with private venture capital to drive innovation. Looking ahead, ongoing scrutiny will ensure these partnerships prioritize merit and national interests, potentially setting precedents for future strategic financings.
The broader implications extend to sectors like cryptocurrency, where policy relaxations have fueled significant gains for aligned firms. Stakeholders should monitor developments to understand evolving dynamics in defense tech and financial investments. For more on related opportunities, explore our coverage of emerging trends in secure supply chains.
This funding not only bolsters Vulcan’s growth—from 30 to 50 employees by year-end—but also underscores the importance of rare earth magnets in modern defense. As CEO John Maslin stated to the Financial Times, every piece of military hardware relies on these components, making domestic production a cornerstone of security.
Questions about influence persist, with Kedric Payne of the Campaign Legal Center noting the need to avoid appearances of self-benefit in presidential dealings. Pentagon and company officials maintain the process was merit-based, with no involvement from Donald Trump Jr. or 1789 Capital in negotiations.
Amid these assurances, the deal’s scale and timing fuel discussions on ethics in public-private partnerships. Vulcan’s focus on reliable magnet supplies aligns with broader efforts to counter global supply risks, as evidenced by the Commerce Department’s equity participation.
In the context of 1789 Capital’s evolution, its shift toward policy-impacted industries signals a maturing investment strategy. From crypto payouts exceeding $1 billion for the Trump family to defense contracts, the firm’s trajectory illustrates interconnected economic and political landscapes.
