Enterprise capital investments within the Better Los Angeles area greater than doubled to $5.8 billion within the second quarter, in comparison with a yr in the past, as buyers poured cash into the world’s protection tech and aerospace corporations amid escalating geopolitical tensions.
Costa Mesa-based protection tech firm Anduril acquired essentially the most enterprise capital within the area final quarter, elevating a $2.5-billion funding spherical, in response to analysis agency CB Insights.
The corporate, co-founded by entrepreneur Palmer Luckey, mentioned it could use the cash to put money into scaling up its manufacturing, hiring, taking large swings on merchandise and capabilities and different efforts similar to its mergers and acquisitions technique.
Anduril, which manufactures autonomous weapons methods, was just 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 latest spherical with a $1-billion funding, marking the agency’s largest test so far, mentioned Founders Fund accomplice and Anduril govt chairman Trae Stephens in a Bloomberg TV interview in June.
The corporate’s latest fundraising spherical is an instance of robust investor curiosity in protection tech and aerospace, which enterprise companies consider is ripe for disruption, with startups taking market share from incumbents similar 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 yr, in response to CB Insights. For the primary half of 2025, buyers allotted $11.1 billion in enterprise capital to protection tech corporations, in comparison with $8.2 billion within the full yr of 2024, CB Insights mentioned.
Buyers are keen to leap on an space of progress that has numerous help from the federal government, because the U.S. enters a interval by which protection and the geopolitical area is on the forefront, analysts mentioned. 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,” mentioned 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 corporations representing 9 of the highest 30 non-public companies globally in protection tech which have acquired essentially the most enterprise capital financing, in response to CB Insights.
Native corporations mentioned they have been drawn to Southern California due to its robust expertise pool, with close by universities like Caltech and USC Viterbi College 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, mentioned Professor Dan Wadhwani, director of the Lloyd Greif Middle for Entrepreneurial Research on the USC Marshall College of Enterprise. As startups construct new applied sciences, they might want to combine them with different present 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 mentioned.
Final quarter, protection tech and aerospace corporations represented the highest 4 companies receiving enterprise capital, in response to CB Insights. Anduril led the way in which, adopted by Redondo Seaside-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 mentioned.
Chaos Industries makes 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, mentioned Chief Technique Officer Will Hurd.
Hurd mentioned he remembers when he labored at an funding financial institution in 2021 and most buyers didn’t wish to fund corporations 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 advanced, with a wave of protection tech and aerospace corporations, together with Chaos Industries.
“Now the adversaries have gotten more sophisticated, and we have to match that,” Hurd mentioned.
Impulse Area, which makes house automobiles, mentioned there was surging buyer demand. The corporate mentioned it has greater than 30 signed authorities and industrial 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,” mentioned CEO and founder Tom Mueller in an announcement. “Now, the market is demanding more.”
