As the director of commercial engagement for the Defense Innovation Unit (DIU), a Department of Defense (DOD) organization that funds startups developing cutting-edge weapons technology for the military, Sarah Pearson is well acquainted with keeping secrets. What’s surprising is that her team often keeps secrets from the very startups it recruits. It’s not for any cloak-and-dagger reason, just bureaucracy. With security clearances taking up to 18 months, Pearson’s team often supplies startups with fake data—made-up enemy capabilities—to simulate real defense scenarios, so they have something to work on until they’re cleared to access classified material. “In the fast-moving world of AI, if it takes 18 months . . . I no longer need that company, their model is already obsolete,” she says. Enter Nooks, a startup that acts as a kind of coworking space for classified communication. The company’s cutesy name and squirrel logo belie its purpose: to build and maintain a network of these high-tech, espionage-proof, on-demand facilities where startups can handle classified information—spaces known as SCIFs, or sensitive compartmented information facilities. Traditionally built inside military sites, defense contractor offices, and government buildings, SCIFs are fortified rooms designed to prevent electronic surveillance or intrusion. They require layers of specialized material, electronic shielding, metal reinforcements, and heavy security.  Nooks was founded in 2021 by former Navy pilot Sean Blackman and two fellow aviators to solve a paradox plaguing national security: you need a SCIF to win a defense contract, but probably don’t have the funds or permission to build one without already having a contract.  Instead, they asked, what if startups could rent access to SCIFs without the millions in upfront costs and years it takes to construct? The firm just raised a $25 million Series A round, led by New York’s Zigg Capital, in conjunction with the Space Development Agency within the Air Force, valuing the firm at $105 million. It now plans to launch its first three locations this year: in Arlington, Virginia; Colorado Springs, Colorado; and El Segundo, California. The idea is to offer classified infrastructure as a service, with 50,000-square-foot-sites subdivided into different classification levels, and eventually, grow to a network of 100 sites nationwide, especially areas with tech talent.  “There’s only so much you can do unclassified before it becomes, ‘well, this was a nice science project,’” Blackman says.  Where traditional SCIFs are like buying a home and companies like Westway offer long-term leases, Nooks is more like Airbnb for classified work. For startups, that means faster entry into military innovation—and for the military, a broader talent pool.  ‘An outdated process’ SCIFs must be located in buildings without foreign ownership or proximity to adversarial entities, which is why many operators buy entire buildings outright. The design and security standards every SCIF must adhere to, set by the Office of the Director of National Intelligence, evolve sporadically as surveillance threats shift. (Pearson says the reason for the last SCIF update, ICD 705, which contained a laundry list of updates, remains classified.) Meanwhile, many existing SCIFs are aging out of use, and the upkeep costs are adding up. Virginia Representative Rob Wittman, a member of the House’s Defense Modernization Caucus, says older SCIFs are small, isolated, and “look like a walk-in cooler slammed into the corner of the building.” These older spaces don’t make for an attractive workspace for today’s budding tech talent, and the cost of replacing offers a huge opportunity to Blackman. Nooks seeks to untangle a bureaucratic bottleneck that defense and tech industry advocates say stifles military innovation. Battlefield technology is rapidly evolving, and startups want to take advantage of federal funding for dual-use tech that has civilian and battlefield applications, and funding is flowing. Already this year,  over $3 billion has been invested in defense startups, according to Pitchbook, and the Pentagon’s $1 trillion budget will focus on high-tech weapon systems like drones, cybersecurity, robotics, and AI. Blackman, who had a stint at Facebook and experience in the defense innovation space, saw an opportunity to get government moving more like a startup; beginning in 2021, he and his colleagues interviewed hundreds of people across the defense innovation space to figure out their pain points and earn the trust needed to open Nooks, and eventually landed a small Air Force contract to start testing out the concept.  But to make these startup investments work requires classified info and sharing enemy battlefield capabilities; some DoD requests for proposals can’t even be seen outside a SCIF.  The large defense contractors—called primes—have historically taken the overwhelming chunk of def