Enterprise capital investments within the Higher Los Angeles area greater than doubled to $5.8 billion within the second quarter, in comparison with a 12 months in the past, as buyers poured cash into the world’s protection tech and aerospace firms amid escalating geopolitical tensions.
Costa Mesa-based protection tech firm Anduril obtained essentially the most enterprise capital within the area final quarter, elevating a $2.5-billion funding spherical, in keeping with analysis agency CB Insights.
The corporate, co-founded by entrepreneur Palmer Luckey, stated it might use the cash to spend money on scaling up its manufacturing, hiring, taking massive swings on merchandise and capabilities and different efforts akin to its mergers and acquisitions technique.
Anduril, which manufactures autonomous weapons methods, was lately awarded a $99.6-million contract to construct a subsequent technology command and management prototype for the U.S. Military that it says will assist modernize communications on the battlefield. Anduril employs greater than 6,000 folks and has a valuation of $30.5 billion.
Enterprise capital agency Founders Fund led the current spherical with a $1-billion funding, marking the agency’s largest verify thus far, stated Founders Fund accomplice and Anduril govt chairman Trae Stephens in a Bloomberg TV interview in June.
The corporate’s current fundraising spherical is an instance of robust investor curiosity in protection tech and aerospace, which enterprise corporations consider is ripe for disruption, with startups taking market share from incumbents akin to Lockheed Martin and Northrop Grumman.
Globally, enterprise capital investments in protection tech is on the rise. Already, the funding on this class has outpaced final 12 months, in keeping with CB Insights. For the primary half of 2025, buyers allotted $11.1 billion in enterprise capital to protection tech firms, in comparison with $8.2 billion within the full 12 months of 2024, CB Insights stated.
Buyers are keen to leap on an space of progress that has a variety of assist from the federal government, because the U.S. enters a interval through which protection and the geopolitical area is on the forefront, analysts stated. The world is being rocked by a number of worldwide conflicts, together with Russia’s ongoing struggle on Ukraine and Israel’s battle in opposition to Hamas in Gaza.
“We’re entering an administration, a regulatory period, and a broader geopolitical arena where defense is at the forefront of everyone’s minds,” stated Jason Saltzman, head of insights at CB Insights. “We’re starting to see a lot of support from the government in particular, with an increasing number of investors hopping on the defense tech train.”
Southern California, lengthy an aerospace and protection tech hub, is benefiting from the investor curiosity, with the world’s firms representing 9 of the highest 30 personal companies globally in protection tech which have obtained essentially the most enterprise capital financing, in keeping with CB Insights.
Native firms stated they have been drawn to Southern California due to its robust expertise pool, with close by universities like Caltech and USC Viterbi Faculty of Engineering.
Going again to World Warfare II and the Chilly Warfare interval, key protection contractors like Northrop Grumman and Hughes have been constructed within the South Bay space, making the area an important locale for the protection and aerospace industries, stated Professor Dan Wadhwani, director of the Lloyd Greif Middle for Entrepreneurial Research on the USC Marshall Faculty of Enterprise. As startups construct new applied sciences, they might want to combine them with different current methods, he added.
“The proximity to key players within the defense industry makes L.A. a prime place for capitalizing on the growing trends towards defense spending,” he stated.
Final quarter, protection tech and aerospace firms represented the highest 4 companies receiving enterprise capital, in keeping with CB Insights. Anduril led the best way, adopted by Redondo Seashore-based Impulse Area, which raised $300 million, Hawthorne-based Chaos Industries that had a $275-million funding spherical and L.A.-based spacecraft producer Apex, which raised $200 million within the second quarter, CB Insights stated.
Chaos Industries makes sensors and radars that present warning and monitoring in opposition to unmanned aerial methods, missiles and plane. The corporate, which has greater than 100 workers, raised a complete of $490 million because it was based in 2022. The funding will go towards hiring and growing the corporate’s manufacturing capabilities, stated Chief Technique Officer Will Hurd.
Hurd stated he remembers when he labored at an funding financial institution in 2021 and most buyers didn’t need to fund firms the place the federal government was their shopper as a result of there was a concern or lack of awareness of how that course of labored. Now, that’s modified and developed, with a wave of protection tech and aerospace firms, together with Chaos Industries.
“Now the adversaries have gotten more sophisticated, and we have to match that,” Hurd stated.
Impulse Area, which makes house autos, stated there was surging buyer demand. The corporate stated it has greater than 30 signed authorities and business contracts value almost $200 million in worth and the extra enterprise capital funding will go towards hiring, scaling manufacturing and accelerating its analysis and improvement.
“We’ve proven that we can build fast and fly successfully,” stated CEO and founder Tom Mueller in a press release. “Now, the market is demanding more.”
