In the second quarter, venture capital investments in the Greater Los Angeles region skyrocketed to $5.8 billion, more than double the amount recorded a year prior.
This surge is largely attributed to heightened investor interest in defense tech and aerospace companies, driven by increasing geopolitical tensions globally.
Leading the charge was Costa Mesa-based Anduril, a defense tech company that secured a remarkable $2.5 billion in funding, as reported by research firm CB Insights.
Co-founded by entrepreneur Palmer Luckey, Anduril plans to allocate the new capital towards expanding its production capabilities, enhancing hiring efforts, and pursuing ambitious product and capability development initiatives.
The company has also set its sights on mergers and acquisitions as part of its growth strategy.
Anduril specializes in manufacturing autonomous weapons systems and was recently awarded a significant $99.6 million contract from the U.S. Army to develop a next-generation command and control prototype, which aims to modernize battlefield communications.
With a workforce exceeding 6,000 and a current valuation of $30.5 billion, Anduril exemplifies the strong investment momentum in the defense sector.
This recent funding round saw venture capital firm Founders Fund make a historic $1 billion investment, marking its largest investment to date, as stated by Founders Fund partner and Anduril executive chairman Trae Stephens in a Bloomberg TV interview.
The interest in Anduril underscores a broader trend of strong investor enthusiasm for companies in defense tech and aerospace, which are viewed as ripe for innovations that challenge established players like Lockheed Martin and Northrop Grumman.
According to CB Insights, the global landscape for venture capital investments in defense tech is flourishing, with funding already surpassing that of the previous year.
In the first half of 2025, defense tech companies secured $11.1 billion in venture capital, exceeding the $8.2 billion accumulated throughout all of 2024.
Analysts note that a period of growth in this sector is being fueled by substantial governmental support as defense and geopolitical considerations take center stage.
With global conflicts such as Russia’s ongoing war in Ukraine and Israel’s conflict with Hamas in Gaza dominating headlines, the mood among investors is shifting towards defense capabilities.
Jason Saltzman, head of insights at CB Insights, emphasized the new focus on defense, remarking, ‘We’re entering an administration, a regulatory period, and a broader geopolitical arena where defense is at the forefront of everyone’s minds.’
He pointed out that an increasing number of investors are recognizing the importance of supporting the defense tech sector.
Southern California’s long-established role as a hub for aerospace and defense technology is proving beneficial, as local companies represent nine of the top 30 global private entities that have attracted significant venture capital in defense tech, per CB Insights.
Companies in the region have noted the advantage of being located near strong educational institutions like Caltech and the USC Viterbi School of Engineering, which supply a skilled talent pool.
Professor Dan Wadhwani, director of the Lloyd Greif Center for Entrepreneurial Studies at the USC Marshall School of Business, highlighted the historical significance of Southern California in defense contracting, noting the roots of major players like Northrop Grumman and Hughes.
As new startups emerge, their ability to integrate new technologies with existing systems is crucial for their success in this industry.
‘Los Angeles is a prime place for capitalizing on the growing trends toward defense spending,’ he said, referencing the area’s close proximity to influential defense industry players.
In the last quarter alone, companies in defense tech and aerospace secured the top four venture capital investments.
Alongside Anduril, Redondo Beach’s Impulse Space raised $300 million, while Chaos Industries in Hawthorne secured $275 million. Los Angeles-based Apex, a spacecraft manufacturer, raised $200 million.
Chaos Industries focuses on developing radar systems designed for warning and tracking against unmanned aerial vehicles, missiles, and aircraft.
With over 100 employees, the company has raised a total of $490 million since its inception in 2022, with plans to expand its manufacturing capabilities and hiring.
Chief Strategy Officer Will Hurd remarked on the significant change in investor sentiment towards defense companies, reflecting on a time just a couple of years back when investors showed reluctance to fund firms reliant on government contracts.
‘Now the adversaries have gotten more sophisticated, and we have to match that,’ Hurd stated, underscoring the need for advanced tech solutions in defense.
Impulse Space, a company that manufactures space vehicles, has reported a surge in customer demand, currently holding over 30 signed government and commercial contracts worth nearly $200 million.
The additional funding will be utilized to hire more staff, scale production, and accelerate R&D efforts.
CEO Tom Mueller emphasized the company’s capability to deliver efficiently, stating, ‘We’ve proven that we can build fast and fly successfully. Now, the market is demanding more.’
image source from：latimes
