Palmer Luckey’s defence start-up Anduril raises almost $1.5bn

Defense tech startup Anduril has raised nearly $1.5 billion in the second-largest US venture capital round of the year, marking a milestone for young tech companies trying to break into the notoriously difficult field of defense procurement.

Andoril said the investment is worth $7 billion, excluding new cash it is raising, compared with $4.2 billion 18 months ago. This comes at a time when the giant investment rounds that were a feature of the recent venture capital boom are over, while many startups are struggling to avoid bear rounds that force them to accept lower valuations.

Endorail was founded five years ago by Palmer Lackey, who sold his previous startup, virtual reality company Oculus, to Facebook at the age of 21 for $2 billion. In an interview with the FT, Lucky said he had decided to build a company. The defense giant is based on new technologies such as artificial intelligence and drones, as many Silicon Valley companies have turned their backs on the Pentagon under pressure from their own workers.

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Major tech companies in the US mostly refused to work with it [Department of Defense]” he said. “You have all this incredible technological talent that is inaccessible to the Department of Defense. “There has never been a point in the history of the United States when things have been like this.”

Tech startups have struggled to sell to the military because of the defense industry’s long buying cycles and the challenge of gaining enough trust to win significant contracts.

“They got laughed out of Silicon Valley, a lot of people didn’t believe it could be done,” said Catherine Boyle, a partner at Anduril’s investor Andreessen Horowitz. The nature of war has fundamentally changed [large defence contractors] “They cannot meet the logistical needs.”

In the strongest sign that the Pentagon is turning to the software and AI capabilities of newer defense companies, Endorail earlier this year won a contract with the US Special Operations Command worth nearly $1 billion to play a systems integrator role in the anti-drone project. became. . Along with a series of contracts with various branches of the US military, Lackey said the company works with “half a dozen NATO allies” and brings in “hundreds of millions” of dollars a year.

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

Boyle said Russia’s invasion of Ukraine has changed attitudes in Silicon Valley, making many tech startups more willing to work with the Pentagon. However, it’s still a hot debate in tech circles about how far companies that aren’t founded solely to work in the defense field should go, especially when it comes to offensive weapons.

Lackey said Endorail didn’t draw the line at making a weapon, but it won’t use facial recognition software because the technology can never be reliable enough to be trusted in life-or-death situations. He rejected calls for a ban on autonomous weapons, arguing that always requiring a “human in the loop” to make the final decision to fire puts the United States and its allies at a disadvantage to countries that use fully robotic weapons.

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Instead, he called for clear lines of responsibility for the decision to use autonomous weapons in certain situations, rather than actually firing them, but added that only democratically elected leaders should set the rules.

“You shouldn’t be asking me to make that decision because you shouldn’t be asking corporate executives to set the foreign policy or the military policy of the United States,” he added. We must just be dumb computer guys making these things.

The latest investment, which brings Endorail’s total fundraising to $2.2 billion, was led by Valor Equity Partners. The company was reported earlier this year to have started the process of raising the round. In the biggest VC round of the year, Elon Musk’s space company SpaceX raised nearly $1.7 billion in June.

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