Anduril Looking To Raise As Much As $500M

Defense and security firm Anduril is looking to raise between $400 million and $500 million from investors, possibly in a convertible note, per a Bloomberg report.

The Costa Mesa, California-based startup is said to be looking for a $10 billion valuation. In a convertible note deal, that debt would be converted to equity at a $10 billion valuation, according to the report.

Convertible deals are repaid to the investor at a later point in equity — such as after another financing round or IPO — typically at a discount and can also include an interest rate.

Anduril locked up a Series E worth nearly $1.5 billion that valued the company at $8.5 billion last December. That nearly doubles the company’s previous valuation in June 2021.

New money

The defense tech startup just acquired autonomous aircraft developer Blue Force Technologies last month and could use the money for similar deals.

Anduril’s most recent previous round was led by Valor Equity Partners, with participation from Founders Fund, Andreessen Horowitz, General Catalyst, 8VC 1, Lux Capital, Thrive Capital, DFJ Growth, Elad Gil, Lachy Groom, Human Capital, Marlinspike, WCM Investment Management, MVP Ventures, Lightspeed Venture and Thomas Tull’s U.S. Innovative Technology Fund

Defense tech, venture dollars and the general tech culture haven’t always been a great mix. Some investors have shied away from the space for moral reasons, and tech companies have been wary of letting their tech be used for military purposes. The military and defense sectors also can be hard to navigate for startups — with extremely difficult and long sales cycles which can crush a startup’s cash flow.

According to Crunchbase data, U.S.-based defense tech startups saw only $2.1 billion invested in 53 total deals — and that includes Anduril’s $1.5 billion — last year. This year so far seems to paint an even bleaker picture, with about $350 million going to defense tech startups domestically in 32 deals.

Anduril was founded in 2017 by Palmer Luckey, most famous for selling virtual reality company Oculus to Meta — then called Facebook — for $2 billion.

The firm builds software and hardware enhanced with artificial intelligence and machine learning for the military and defense industry. It works with the U.S. and its allies to create drones, underwater vehicles, and different operating and control systems.

Last year, the company closed a 10-year, $967 million contract with the U.S. Special Operations Command.

The company also has its critics. It has been criticized for possibly enabling the enforcement of border security policies and government surveillance.

Anduril has raised $2.2 billion total, per Crunchbase data.