Palmer Luckey’s defense startup Anduril raises nearly $1.5 billion

Defense technology startup Anduril has raised nearly $1.5 billion in the second-biggest venture capital round of the year in the US.

Anduril said he valued the investment at $7 billion, excluding the new cash it is raising, up from $4.2 billion 18 months ago. It comes at a time when the mammoth investment rounds that were a feature of the recent venture capital boom have all but dried up, while many startups struggle to avoid “bear rounds” that force them to accept lower valuations. .

Anduril was founded five years ago by Palmer Luckey, who sold his previous startup, the virtual reality company Oculus, to Facebook for $2 billion at the age of 21. In an interview with the FT, Luckey said that he had set out to build a large defense company based on new technologies like AI and drones because many Silicon Valley companies, under pressure from their workers, had turned their backs on it. Pentagon.

“The big tech companies in the US were largely refusing to work with the [Department of Defense],” he said. “You have all this incredible technological talent that is just inaccessible to the Department of Defense. There has never been a point in the history of the United States where things were like this.”

Tech startups have had trouble selling to the military due to long defense industry buying cycles and the challenge of building enough trust to win major contracts.

“Silicon Valley was mocked, a lot of people didn’t think it could be done,” said Katherine Boyle, a partner at Andreessen Horowitz, an Anduril investor. “The nature of war has fundamentally changed and the [large defence contractors] they are not going to be able to meet the acquisition needs.”

In the strongest sign yet that the Pentagon is turning to the software and AI capabilities of newer defense firms, Anduril earlier this year won a US Special Operations Command contract. Along with a series of contracts with different branches of the US military, Luckey said the company works with “half a dozen NATO allies” and has “hundreds of millions” of dollars in annual revenue.

Anduril is mainly known for autonomous systems such as drones, as well as watchtowers used for border security. Most of its engineers work on its Lattice software platform, which collects data from many different weapons and surveillance systems, most of which are not built by the company.

The Russian invasion of the Ukraine has changed attitudes in Silicon Valley and made many more tech companies willing to consider working with the Pentagon, Boyle said. However, there is still a heated debate in tech circles about how far companies that were not created solely to work on defense should go, particularly when it comes to offensive weapons.

Luckey said Anduril did not draw the line on weapon construction, but would not use facial recognition software, because the technology could never be reliable enough to be trusted in life-and-death situations. He rejected calls to ban autonomous weapons, arguing that always requiring a “human in the loop” to make the final decision to fire would leave the US and its allies at a disadvantage against countries using fully robotic weapons.

Instead, he called for clear lines of responsibility on the decision to employ autonomous weapons in particular situations, rather than firing them, but added that only democratically elected leaders should make the rules.

“They shouldn’t want me to make that decision because they shouldn’t want corporate executives setting US foreign policy or military policy,” he added. “We should be the dumb guys on the computer who do these things.”

The latest investment, which brings Anduril’s total fundraising to $2.2 billion, was made by Valor Equity Partners. It was reported earlier this year that the company had begun the process of raising the round. In the biggest venture capital round of the year, Elon Musk’s space startup SpaceX raised nearly $1.7 billion in June.

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