By Lizette Chapman | Bloomberg
Costa Mesa-based defense technology startup Anduril Industries has raised $1.5 billion in a new round of funding and plans to spend hundreds of millions on a new factory to produce its missiles, underwater vehicles and other autonomous weapons systems at greater scale and speed.
The deal, which values Anduril at $14 billion, is one of the largest venture capital financings of the year so far and reflects the company’s success in winning government contracts as well as growing investor enthusiasm for defense technology companies.
Anduril was founded in 2017 by Palmer Luckey. The Long Beach native developed the virtual reality headset Oculus Rift as a teenager. Oculus VR was sold to Facebook for $2 billion in 2014. Luckey’s home is now Orange County.
Peter Thiel’s Founders Fund and Sands Capital co-led the Series F funding round, which has been in the pipeline for more than a month. The deal nearly doubles the startup’s valuation from its previous funding round in 2022, which raised $1.48 billion.
Anduril’s planned manufacturing facility will be called Arsenal-I and will span more than 460,000 square meters, roughly the size of 87 football fields. The location has not yet been decided. As Anduril expands its manufacturing capacity, the company is also investing in custom software and plans an additional manufacturing site in the United States or an allied country.
“Arsenal is both a philosophy and a manufacturing facility,” said Christian Brose, Anduril’s chief strategy officer, during a press conference this week. “It’s a completely different way of thinking about building for scale.”
Arsenal-1 will concentrate manufacturing of nearly all Anduril products in a central facility, the company said. The idea is to use technology-intensive manufacturing processes – adopted by companies such as Space Exploration Technologies Corp. and Tesla Inc. – to increase efficiency and scale.
With the new round of financing, Founders Fund and other investors are betting on the ability of startups like Anduril to take market share from established defense companies.
Founders Fund has close ties to Anduril: Trae Stephens, co-founder and chairman of Anduril, is also a partner at Founders Fund, which has backed the company since its inception and has received new investors including Fidelity Management & Research Co., Counterpoint Global and Baillie Gifford.
Although Anduril has secured some significant contracts with the U.S. government and other militaries, long-standing, traditional defense contractors still take the lion’s share of U.S. defense spending. The company believes the wars in Ukraine and Gaza, as well as rising tensions with China, could change that calculation.
In particular, Anduril aims to increase US weapons production capacity, which he says is dangerously low. A report by the Center for Strategic and International Studies found that in the event of a US-China war in the Taiwan Strait, the US could run out of some munitions supplies in less than a week.
“The future must be different from the past and the present,” said Brose. “The lesson we learn from Ukraine is the importance of adaptability.”
Anduril said Arsenal-1 will employ thousands of people and aim to produce tens of thousands of autonomous weapons systems annually. The facility will use mostly off-the-shelf components and simple designs, allowing for faster customization, the company said. It will also centralize production, which currently takes place at its factories in places like California, Georgia and Sydney.
The goal, Brose said, is to enable Anduril to reach the production capacity that the U.S. government has been demanding for years. “Having everything under one roof makes that possible,” he said.
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