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Defence technology start-up Anduril Industries has raised $1.5bn to accelerate the production of autonomous weapons for the US military and its allies, as investment in the sector surges on the back of conflict in Ukraine.
Peter Thiel’s venture capital firm Founders Fund, which provided the seed funding that launched Anduril, co-led the latest round with Virginia-based investor Sands Capital.
This latest investment values the California-based start-up at $14bn, double its valuation in December 2022, the last time the company raised money. Fidelity Management, Baillie Gifford and Franklin Venture Partners, the venture capital arm of Franklin Templeton, also participated in the round.
The seven-year-old company will invest the funds into new manufacturing facilities capable of mass producing “tens of thousands of autonomous weapons systems addressing the urgent needs of the United States and our allies”.
Anduril will invest “hundreds of millions” of dollars to develop the first factory, named Arsenal-1, which will be in the US — although the company declined to specify where. A second facility could be built overseas.
Anduril’s rapid growth is a sign of shifting sentiment among venture capitalists, many of whom have reversed their opposition to investing in defence technology since Russian President Vladimir Putin’s full-scale invasion of Ukraine in 2022. Venture investment into defence tech doubled to $33bn between 2019 and 2023 amid a broader downturn in venture funding.
“The bottom line is: America and our allies don’t have enough stuff,” said Anduril chief strategy officer Chris Brose, previously the late US senator John McCain’s principal adviser on national security. “We don’t have enough vehicles, we don’t have enough platforms, we don’t have enough weapons. This has been true for a long time,” he added. “Ukraine has put that into high relief.”
Anduril is the most prominent of a group of defence start-ups aiming to break into a sector where a handful of “primes” — large defence contractors including Lockheed Martin, Raytheon, General Dynamics and Boeing — have a stranglehold on lucrative government contracts.
The company estimated that the US would run out of munitions in “less than eight days” in the event of a major conflict.
The start-up, headquartered in Orange County, California, and led by virtual reality pioneer Palmer Luckey, has made inroads with the US and UK military, winning contracts to supply both with advanced weapons systems.
In 2022, it was awarded a $1bn contract by US Special Operations Command to provide anti-drone technology. Earlier this year, it beat Lockheed Martin, Northrop Grumman and Boeing to win a large US Air Force contract to provide collaborative combat aircraft.
Luckey co-founded Anduril in 2017 after he left Facebook, which had bought his virtual reality headset business, Oculus, for $2bn three years earlier.
The US spends far more on defence than any other country in the world, much of it on military hardware. Its defence budget is $842bn this year.
But Brose said the government’s procurement of military technology was slow and insufficient. “We’re off by an order of magnitude the amount of defence systems that we as America are generating today,” he said.
Rather than highly complex, bespoke vehicles and armaments, Anduril will develop autonomous weapons that are “as simple as possible”, using the commercial manufacturing techniques used by tech companies such as Elon Musk’s Tesla and SpaceX as a blueprint.
Anduril said Arsenal “dismantles the traditional defence production preference for complexity by . . . eliminating unnecessary materials, parts and specialised processes”.
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