Defense technology It was a hot topic last year — In particular, gecko robotics, Shield AI and True Abnormality But this year hasn't been all that strong for the industry.
As of mid-May, the amount raised was less than half of the same period last year. From Crunchbase dataThis is despite heightened tensions in the Middle East as the Ukraine war enters its third year.
Funding for startups in the military, national security and law enforcement industries fell to $118 million in the first quarter, down 74% from the $459 million invested in such startups in the first quarter of last year.
(chart)
In the 12 months to the middle of the second quarter, defense startups raised just $228 million, down 62% from the roughly $600 million raised in the same period last year, though of course that could change dramatically if circumstances change. report Anduril The company officially launches a $1.5 billion funding round at a valuation of $12.5 billion.
Where is the cash?
Anduril was a software and hardware defense technology startup whose completion of a major acquisition in late 2022 caused many to focus on the industry again. $1.5 billion Series E.
Defense tech is often a tough sell for venture capitalists, as startups often develop technologies that have been used by the military for decades, but VCs are sometimes unwilling to invest in defense tech for their own moral reasons or due to pressure from LPs.
But the big round to Anduril — The fourth-largest funding round by a U.S.-based startup In 2022 — Last year seemed to spur a gold rush for defense startups.
As a result, funding activity picked up at the end of the year, with defense technology startups raising $802 million in funding. The big deals of the quarter included:
- Shield AI, a defense and aerospace startup developing AI pilots, Raised $200 million Series F at $2.7 billion valuation The round was co-led by riot ventures and Thomas Tull's National Innovative Technology Fund The latest funding comes less than a year after the San Diego-based company raised $60 million in December 2022, reaching a valuation of $2.2 billion.
- During December, Gecko RoboticsThe company develops robots that assess the safety and condition of critical infrastructure. Series C extension raises additional $100 million led by big names National Innovative Technology Fund and founders fundThe Pittsburgh-based robotics startup announced a $73 million Series C in March 2022.
- Based in Centennial, Colorado in late December. True AbnormalityThe proposal was made by companies that develop hardware and software systems to support space safety and readiness. $100 million In a round led by riot venturesThe company's valuation has not been disclosed, but Bloomberg reported It hadn't even hit $1 billion yet. The startup helps governments and private customers monitor threats to satellites and other space assets.
Defense technology investment slows
But the first four and a half months of this year have looked different.
There are no 9-figure funding rounds in this space. In fact, here are the biggest funding rounds this year:
- This month, Kihei, Hawaii-based satellite tracking software developer privateer $56.5 million funding round led by space-focused venture capital firm Aero X Ventures acquired an analytics company Orbital Insight.
- March, based in Colorado Springs, Colorado Defense Unicorna software startup that provides open source software and AI capabilities for national security systems, has raised $35 million in Series A funding.
- Also this month, Tucson, Arizona-based View of the worlda stratospheric exploration startup, has secured $25 million in Series D funding.
Of course, these figures may not tell the full story of defense technology funding.
It's a tough industry to define. One of the biggest funding rounds this month was Scaling AI Raise $1 billion in round guided by accelerator The company values the data labeling and evaluation startup at a staggering $13.8 billion. Although not a defense technology company per se, its data labeling and evaluation technology is used in defense applications.
So while funding for start-ups that are firmly committed to this space is declining, funding for many other overlapping areas, Cybersecurity Robotics saw an increase in funding from the fourth quarter of 2023 to the first quarter of this year.
In cybersecurity, cybersecurity startups raised nearly $2.7 billion in Q1 2024. This was a 69% increase from the previous quarter, when cybersecurity startups raised just $1.6 billion. From Crunchbase data.
The same goes for robotics. Venture funding in this space soared from $1.4 billion in the fourth quarter of 2023 to $2.1 billion in the previous quarter, according to Crunchbase. data.
It's also important to remember that the numbers associated with defense technology funding are small, so one big round can make a big difference. If Anduril raises $1 billion or $2 billion, it will certainly change the complexion of any given quarter.
However, it is worth noting that funding for this sector has slowed significantly, even if only temporarily.
methodology
According to Crunchbase data, defense tech is defined by the military, national security, and law enforcement industries. Most announced rounds are reflected in the database, but there may be a slight lag for rounds reported later in the quarter.
Related Crunchbase Pro queries:
Related books:
Illustration: Dom Guzman
Stay up to date on recent funding rounds, acquisitions, and more with Crunchbase Daily.
