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Anduril Seeks Value Increase to $12.5B

Palmer Luckey’s defense company Anduril Industries Inc. is reportedly aiming for one of the largest corporate fundraisings in the U.S. this year.

Luckey and Anduril’s other backers reportedly are seeking a valuation of $12.5 billion for the company, after it neared $10 billion just last fall.

Anduril, which closely guards its sales figures, doubled revenue to $500 million last year, The Information website reported on May 20, quoting two people who have spoken with the company.

Luckey, who founded Anduril in 2017 and previously founded Oculus VR, is challenging defense titans such as RTX Corp.—formerly Raytheon Technologies—and Lockheed Martin Corp.

He sees a sea change, with young tech wizards who once shunned defense work now finding it “cool.”

“The war in Ukraine has made a bunch of people at least temporarily change their minds, which I intend to leverage to the fullest,” Luckey told Octane’s Tech Innovation Forum in Irvine earlier this month.

Anduril’s drones have been playing a role in Ukraine’s attempts to repel invading Russian forces.

$1.5B Funding Sought

The Information reported that Anduril has had “early discussions to raise what would be one of the largest venture capital rounds of the year so far, seeking about $1.5 billion of fresh funds.” The company reportedly has already raised about $2.2 billion in financing.

“We don’t have anything to add to The Information story at this time,” an Anduril spokesperson told the Business Journal.

Luckey’s company releases new products, contracts and other company developments at a blistering pace, ranging from autonomous underwater drones, to the unmanned fighter jet Fury and revamped drones capable of blowing up lumbering armored military vehicles.

Just last week, the company introduced a retooled sentry tower to protect sensitive borders or military troops on the ground.

Anduril’s signature product, Lattice, based on artificial intelligence, can be used in many robotic products that rely on perceiving surrounding areas. For instance, it allows robotic military submarines to decide, without human intervention, whether to follow a target, try to blow it up or take a different course of action.

The workforce has been steadily rising to just under 3,000 today since the company’s founding in 2017.

“Anduril Industries flipped the traditional business model of defense contracting,” according to the private investor website Sacra. “Instead of waiting for Requests for Proposals (RFPs) from governmental agencies, Anduril has gone after a strategy where they take on the R&D burden upfront, allowing them to offer pre-developed, cutting-edge solutions to the Department of Defense and other allied military forces worldwide.”

Anduril’s margin profile of 40% to 50% “significantly exceeds the industry norms of 10%-15%,” Sacra said. It added that Anduril last September was valued at almost $10 billion on the secondary private market of Caplight.

Tackling Titans

Still, Luckey’s privately held company, which relies on artificial intelligence and high-tech systems, has a long way to go before going toe-to-toe with the defense behemoths.

RTX (NYSE: RTX) boasted a market cap of $141 billion as of May 22, while Lockheed Martin (NYSE: LMT) was at $112 billion.

Anduril is attracting investor interest because of its focus on software—particularly artificial intelligence—rather than hardware, according to investor Scott Levine in a post on The Motley Fool website.

“Anduril prioritizes software over the traditional defense industry’s business of building battleships, tanks, fighter jets, and the like,” Levine wrote in an April post. “With its emphasis on autonomous systems, Anduril is particularly appealing to investors who see the massive growth opportunities of businesses specializing in artificial intelligence.”

Luckey told CNBC last June that “I’ve always wanted to be a publicly traded company” and the Pentagon in general likes to deal with listed companies, but “I don’t think that we’re close to any kind of IPO.”

Anduril’s investors include Valor Equity Partners, Peter Thiel’s Founders Fund, Andreessen Horowitz, General Catalyst, 8VC, Lux Capital and Thrive Capital.

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