Modern warfare is evolving, and Anduril Industries plans to capitalize on that change by reimagining the design and production of American military power.
The defense technology startup recently raised $1.5 billion in a new funding round to expand its weapons production. The deal, co-led by Peter Thiel’s Founders Fund and Sands Capital, values Anduril at $14 billion, nearly double the startup’s valuation after its last funding round two years ago.
Anduril’s strategy is to increase American weapons production by mimicking modern techniques and processes used by commercial giants like Elon Musk’s Tesla (TSLA). In other words, Anduril is taking a software-first approach that is flexible enough to build weapons quickly and at scale.
“What we’re doing at Anduril is we’re taking the risk up front to build the capabilities and the infrastructure we need to deploy those capabilities very quickly,” Trae Stephens, co-founder and executive chairman of Anduril and partner at Founders Fund, told Yahoo Finance (video above).
“Is this a bet on ourselves that once we produce these things, customers will come and buy?” asked Stephens. “Absolutely, but I think that’s how it should be. From an industry perspective, you should take some risk.”
Anduril plans to invest the majority of the funds in a new software-defined manufacturing platform and build a new production facility called Arsenal-1.
The factory is expected to ultimately employ more than 1,500 people, have a production capacity of more than 46,000 square meters and produce tens of thousands of weapons annually, such as counter-strike drones and autonomous submarines.
Although the company has not yet decided where to build the Arsenal 1 plant, it already has experience in expanding its production capacity.
In June, Anduril announced a $75 million investment to increase solid rocket motor manufacturing and production capacity in Mississippi. That same month, the company also announced the opening of a factory in Rhode Island that will allow Anduril to increase production of underwater drones.
Startups like Anduril, which are shaking up the American defense industry and aiming to take on the “big guys” – giants like Boeing (BA), Lockheed Martin (LMT), General Dynamics (GD), RTX (RTX) and Northrop Grumman (NOC) – have attracted venture capitalists to the sector.
According to PitchBook, venture capitalists invested $130 billion in defense technology startups between 2021 and mid-June this year.
Nick Beim, partner at venture capital firm Venrock, said investors are eager to invest in the next Anduril, Palantir (PLTR) or SpaceX.
“The nature of warfare is changing significantly due to new technologies,” Beim recently told Yahoo Finance. “I think the future of warfare will be driven much more by AI software and autonomous systems at the edge than by the traditional military platforms used today.”
“Venture-backed companies are now best positioned to deliver these critical systems than traditional defense contractors,” Beim added.
Stephens declined to say when Anduril would go public, but told Yahoo Finance that the company is considering such a move.
“We are increasingly thinking about a three- to five-year time frame in which we will be ready to launch if market conditions are right and the company continues to grow as well as it has done so far,” he said.
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