This industry is, unfortunately, red-hot given the global conflict, record-setting world military expenditure, emerging defense technology trends, as well as the legacy defense primes (e.g., Lockheed Martin, Raytheon Technologies, Northrop Gumman, General Dynamics) antiquated technology and minimal innovation.
Enter Anduril – an AI-powered, modern defense technology company founded by entrepreneur Palmer Luckey. Anduril designs hardware and software solutions to solve complex national security issues for the U.S. government and its allies. These products are intended to modernize defense capabilities domestically and abroad. Anduril sells its products directly to the U.S. Department of Defense, as well as other defense, homeland security, and law enforcement agencies in the U.S. and its ally countries.
We have invested in Anduril at various points in time. Most recently, we co-invested in a secondary transaction for Anduril equity shares at an $9bn valuation.
Investment thesis matters. But so does price. The company then raised a $500M convertible note financing round led by Andreessen Horowitz, which had a post-money valuation cap of $10bn. We have seen recent secondary transactions of Anduril preferred shares in the $11-12bn valuation range. Accordingly, we feel compelled by our (lower) entry valuation.
In 2023, Anduril increased annual contract value by +50%. The company grew revenue by +90% YoY. Both metrics represent significant outperformance of management’s YoY forecast. In 2023, Anduril acquired Adranos, a solid rocket motor manufacturer. Anduril also acquired Blue Force Technologies, a Group 5 unmanned aircraft developer. Anduril was later selected as one of five vendors chosen to develop Collaborate Combat Aircraft, the U.S. Air Force’s flagship autonomous aircraft program.
As always, we will share additional information on Anduril as we receive it, so our investors remain informed.
Anduril – an AI-powered, modern defense technology company founded by entrepreneur Palmer Luckey.