Finance
Defense technology startup Anduril is pursuing a Tesla-like approach to weapons production
Modern warfare is evolving, and Anduril Industries has a plan to capitalize on this shift by reinventing the design and production of American military power.
The defense technology startup recently raised $1.5 billion in a new round of funding to scale up its weapons production. The deal, co-led by Peter Thiel’s Founders Fund and Sands Capital, values Anduril at $14 billion, almost double the startup’s valuation after its previous funding round two years ago.
Anduril’s strategy is to increase U.S. weapons production by replicating the modern techniques and processes used by commercial powerhouses like Elon Musk’s Tesla (TSLA). In other words, it uses a software-first approach that is flexible enough to build weapons quickly and at scale.
“What we do at Anduril is we take the risk up front to build the capabilities and build the infrastructure that we need to deploy those capabilities very quickly,” said Trae Stephens, co-founder and executive chairman of Anduril and partner at Founders. Fund, told Yahoo Finance (video above).
“Is that a bet on ourselves that once we produce these things, the customer will show up and buy it?” Stephen asked. “Absolutely, but I think that’s how it should work. There also needs to be some risk taken from an industry perspective.”
Anduril plans to use most of the money to invest in a new software-defined manufacturing platform and build a new production facility called Arsenal-1.
The factory is expected to eventually employ more than 1,500 people, have a production capacity of more than 5 million square meters and produce tens of thousands of weapons per year, such as counter-attack drones and autonomous submarines.
While the company has not yet determined where the Arsenal-1 facility will be located, it already has experience growing its manufacturing footprint.
In June, Anduril announced a $75 million investment to increase solid rocket engine production and production capacity in Mississippi. That same month, the company also announced the opening of a factory in Rhode Island, allowing Anduril to increase production of underwater drones.
Startups like Anduril, which aim to disrupt the US defense industry and take on the primes – giants like Boeing (BA), Lockheed Martin (LMT), General Dynamics (GD), RTX (RTX) and Northrop Grumman (NOC) — have attracted venture investors to the sector.
According to PitchBook, venture capitalists invested $130 billion in defense technology startups between 2021 and mid-June of this year.
Nick Beim, a partner at venture firm Venrock, explained that investors are eager to invest in the next Anduril, Palantir (PLTR) or SpaceX.
“The nature of warfare is changing significantly as a result of emerging technologies,” Beim recently told Yahoo Finance. “I think the future of warfare will be determined much more by AI software and autonomous systems at the edge than by the traditional military platforms in use today.”
“Venture-backed companies are now best positioned to deliver these critical systems, better positioned than traditional military suppliers,” Beim added.
Stephens declined to say when Anduril would go public, but told Yahoo Finance that the company is considering such a move.
“We’re starting to think a lot more about a three- to five-year timeline where we’ll be ready to launch if market conditions are right and the company continues to grow as well as we are,” he said.
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