Defense tech startup Anduril aims to take a Tesla-like approach to weapons manufacturing

Modern warfare is evolving, and Anduril Industries has a plan to capitalize on this change by reimagining the design and production of American military power.

The defense technology startup recently raised $1.5 billion in a new round of funding to expand its weapons production. The deal, which was co-led by Peter Thiel’s Founders Fund and Sands Capital, values ​​Anduril at $14 billion, nearly double the startup’s valuation after its previous funding round two years ago.

Anduril’s strategy is to increase American weapons production by replicating modern techniques and processes used by commercial powerhouses like Elon Musk’s Tesla ( TSLA ). In other words, it uses a software-based approach that is flexible enough to build weapons quickly and at scale.

“What we do at Anduril is we take the risk upfront to build the capabilities and build the infrastructure we need to deploy those capabilities very quickly,” Trae Stephens, co-founder and executive chairman of Anduril and partner at Founders Fund, he told Yahoo Finance (video above).

“Now is it a bet on ourselves that once we produce these things, the customer will show up to buy them?” Stephens asked. “Absolutely, but I think that’s how it should work. There should be some risk from an industry perspective as well.”

Anduril plans to use most of the funds to invest in a new software-defined manufacturing platform and build a new manufacturing facility called Arsenal-1.

The factory is expected to eventually employ more than 1,500 people, encompass more than 5 million square feet of production capacity and produce tens of thousands of weapons such as counter-attack drones and autonomous submarines.

While the company has yet to determine where the Arsenal-1 facility will be located, it already has experience developing its manufacturing footprint.

In June, Anduril announced a $75 million investment to increase production and manufacturing capacity for solid rocket motors in Mississippi. That same month, the company also announced the opening of a facility in Rhode Island, allowing Anduril to increase production of underwater drones.

Startups like Anduril, which aim to disrupt the US defense industry and take on the “firsts” — giants like Boeing ( BA ), Lockheed Martin ( LMT ), General Dynamics ( GD ), RTX ( RTX ) and Northrop Grumman ( NOC ) — attracted venture investors to the sector.

Between 2021 and mid-June this year, venture capitalists have invested $130 billion in defense technology startups, according to PitchBook.

The story continues

Nick Beim, a partner at venture firm Venrock, explained that investors are eager to invest in the next Anduril, Palantir (PLTR) or SpaceX.

“The nature of war is changing significantly because of emerging 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 that are used today.”

“Venture-backed companies are now best positioned to provide these critical systems, better positioned than traditional military suppliers,” Beim added.

Stephens declined to say when Anduril would IPO, but told Yahoo Finance that the company is considering such a move.

“We’re starting to think a lot more about that kind of three-to-five-year timeline to be ready to go if the market conditions are right and the company continues to grow as well as we have,” he said.

Click here for the latest technology news that will impact the stock market

Read the latest financial and business news from Yahoo Finance