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Anduril Industries Nears $10B Valuation

Add a new valuation designation to the list of firsts that Costa Mesa-based Anduril Industries has brought to Orange County’s startup community.

The defense technology company’s valuation could soon be elevated from unicorn to decacorn status—a word used to describe a privately held startup that has a valuation of more than $10 billion.

Anduril’s current valuation reached $8.5 billion at the end of last year, following a Series E funding, marking a more than fourfold increase from two years prior.

The company, OC’s ninth-largest defense firm by employee count, was founded by local entrepreneur Palmer Luckey just in 2017; no private company in Orange County has reached a $10 billion valuation in less time.

Prior to Anduril, the fastest a local tech company vaulted to a multibillion-dollar valuation was with Irvine’s Oculus VR, which was sold to Facebook for a reported $2.3 billion in 2014, just two years after its founding.

Oculus, a maker of virtual reality goggles, was founded by Luckey, who is now 31 years old.

IPO Speculation

Anduril is currently in talks to raise $400 million to $500 million from investors in a deal that could take the form of a convertible note, sources have told Bloomberg News, which was the first to report of the looming decacorn potential.

That news has reignited speculation of Anduril’s public market potential, which would likely come with an even higher valuation, though the company has yet to disclose any indication of an initial public offering, or IPO.

IPO proceeds are sometimes used to repay investors after convertible deals, though companies can also do so through other fundraising strategies.

Investors

“Instead of raising a traditional funding round, Anduril could raise the money as debt slated to convert to equity at a $10 billion valuation in the future, in the event of a new financing round or other deal,” the Bloomberg report notes.

The talks haven’t been finalized and the details of the convertible note could still change.

Anduril reached its $8.5 billion valuation in December 2022 after closing a financing round worth nearly $1.5 billion.

That round nearly doubled the company’s previous valuation, recorded in June 2021.

It was led by Valor Equity Partners, a longtime Anduril investor, with participation from Founders Fund, Andreessen Horowitz, General Catalyst, 8VC, Lux Capital, Thrive Capital, DFJ Growth, Elad Gil, Lachy Groom, Human Capital, Marlinspike, WCM Investment Management, MVP Ventures, Lightspeed Ventures and Thomas Tull’s newly minted US Innovative Technology Fund (USIT).­­­­

Expansions

Anduril has brought many firsts to Orange County through its innovative defense technology that includes drones, radar surveillance towers, next-gen tanks, and artificial intelligence for the military and defense sectors.

The company has won a nearly $1 billion deal with the U.S. Special Operations Command to lead the military unit’s counter-drone systems integration work.

Additional funds could provide resources for research and development as well as acquisitions; the latter of which has been a busy source of growth for the company.

Anduril last month acquired North Carolina-based Blue Force Technologies, which has been developing the super-sleek uncrewed fighter jet known as “Fury.”

In June, Anduril said it had purchased Adranos, a Mississippi-based manufacturer of solid rocket motors, for an undisclosed sum.

Last year, the company purchased Boston-based startup Dive Technologies, a maker of autonomous underwater vehicles.

Employee Base

Anduril focuses on building computer systems, artificial intelligence, sensor networks and other technologies for border protection and national security purposes.

It’s based out of The Press, a growing office and R&D hub in Costa Mesa that will total some 640,000 square feet upon completion. It signed its lease in 2021, marking one of the largest office leases ever made in Southern California, let alone OC.

The local Anduril headcount grew from 586 in 2022 to 888 as of last month, according to the annual Business Journal’s list of Aerospace and Defense Contractors, and more growth is on the way.

Anduril was advertising almost 300 positions as of last week, including aerodynamics engineer, data engineer and rocket laboratory technician.

If Anduril does eventually reach decacorn status, it would be joining an elite club of other private companies worth more than $10 billion.

They include Chinese tech company ByteDance at a whopping $225 billion, Elon Musk’s SpaceX at $137 billion and OpenAI at $29 billion, all as of last summer, according to industry data reported by Investopedia.

Luckey Notes Value of Being Public

Palmer Luckey, founder of Costa Mesa-based Anduril Industries, is remaining realistic of prospects for his defense firm that may soon achieve decacorn status, or a valuation topping $10 billion.

“I’ve always wanted to be a publicly traded company, but I don’t think that we’re close to any kind of IPO,” Luckey, the creator of Oculus VR, told CNBC in June.

Anduril’s growing base of work for the U.S. military may influence a future IPO.

Luckey acknowledged that the Pentagon likes to deal with publicly traded companies, which face strict financial regulations, rather than having to check and see if privately held companies are “cooking the books.”

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