Chaos Industries Lands $70M As Defense Tech Heats Up

Defense and critical industry technologies company Chaos Industries closed a $70 million Series A led by 8VC1 — becoming the latest startup with a focus on defense tech to close a significant round.

Alpha Wave Global, Lerner Enterprises, Liquid 2 Ventures, Tamarack Global and Valar Ventures also participated in the round.

Chaos, a relatively new startup founded last year, has multiple products in development, including COHERENCE, a sensor, detection and radar solution “with broad defense and commercial applications.”

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The Los Angeles-based company has entered into agreements with governments and commercial customers to ensure its products have strong market fit, Chaos said in a release.

“The United States risks falling behind our adversaries,” said John Tenet, co-founder and executive chairman. “As a result, America is more vulnerable today against rising competition in key technology fields such as AI, machine learning, and advanced manufacturing. Chaos is our response to the urgent call to turn our most forward thinking engineers towards mission critical technologies.”

Spotlight on defense industry

Investors seem to be eyeing the defense space more right now. Just last week, drone startup Skydio locked up a $230 million Series E at a $2.2 billion valuation led by Linse Capital — more than double its valuation from just two years ago.

Skydio produces drones for the consumer, enterprise and government sectors. Its drones are used by every branch of the U.S. Department of Defense.

However, the largest round raised in the last several months was by Costa Mesa, California-based defense and security firm Anduril. Last December, the startup locked up a Series E worth nearly $1.5 billion that values the company at $8.5 billion.

Anduril 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.

The focus on defense is notable. Many big tech firms have shied away from doing business with the U.S. Department of Defense over the years due to employee and public pressures. In addition, the military and defense sectors can be hard to navigate for startups, with long sales cycles that can crush a company’s cash flow.

Nevertheless, investors are seeing a path to big returns in the industry right now, possibly since the government continues to spend even as the economy slows.