Anduril now valued at $14 billion, set to build autonomous weapons factories
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Defense tech upstart Anduril Industries raised $1.5 billion in new venture capital funding at a $14 billion valuation, with some proceeds to be used for building autonomous weapon manufacturing facilities.
Why it matters: Major investors believe Anduril has cracked the government contract code, just seven years after launch.
- Sands Capital and existing investor Founders Fund co-led the Series F round, which is at a 65% post-money premium to where Anduril last raised money in late 2022.
- Other backers include Baillie Gifford, Counterpoint Global (Morgan Stanley), Fidelity, and Franklin Venture Partnern. Each of them tends to invest in private companies that are expected to go public within the next few years.
Catch up quick: The knock on Anduril was always about chickens and eggs. It couldn't get orders until it proved that it could fulfill orders on time and on budget.
- But it built out a well-sourced business development team that has helped it secure a number of recent wins, including a big one with the U.S. Air Force for collaborative combat aircraft.
What they're saying: "There hasn't been a substantial new U.S. defense business in over 50 years," explains Marina Serenbetz, a partner with Sands Capital. "You can't just build it and they will come. You've got to be creative and earn the right to exist."
- Serenbetz adds that her firm wasn't concerned about Anduril CEO Palmer Luckey's outspoken support for Donald Trump, in terms of getting future business, given how much the company has grown during the Biden-Harris administration.
Look ahead: Anduril is scouting stateside locations for a future behemoth factory dubbed Arsenal-1. Another could quickly follow abroad.
- The company expects Arsenal-1 to cover at least 5 million square-feet and employ thousands of people. It also "needs to be capable of producing tens of thousands of autonomous vehicles and weapons," says Chief Strategy Officer Chris Brose.
- Arsenal-1 would join existing and in-the-works facilities, including one in Rhode Island that specializes in underwater drones and one in Mississippi, where the focus is solid rocket motors.
Between the lines: The defense industry's inability to produce equipment en masse has worried both Pentagon officials and outside analysts.
- Protracted wars can bleed stockpiles dry, as underlined by fighting in Ukraine.
- A bipartisan group of national security experts in July warned a "World War II–style industrial mobilization" in the U.S. is not currently feasible.
The bottom line: "America and our allies don't have enough stuff," according to Brose.
- "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."
