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Tuesday, Oct 3, 2023

Anduril Plans More Buys After $1B+ in New Funds

Aiding Ukraine for 'Foreseeable Future,' says Luckey

Defense contractor Anduril Industries Inc. will continue to push to grab more and larger military contracts and introduce new technologies—and continue to look for more acquisition targets—following the completion of its latest funding round, company officials tell the Business Journal.

The closely-watched Costa Mesa startup, which makes a variety of high-tech products for military and other national security uses, from drones to surveillance platforms to submarines, in May was reported to be in the process of raising upward of $1 billion in a Series E round, one which could drive the company’s valuation to nearly $8 billion.

That fundraise has been successful, Chief Legal Officer Babak Siavoshy tells the Business Journal. It’s among the larger funding deals for a privately held tech company this year.

“We’ve raised over a billion dollars since the last time we chatted,” Siavoshy told the Business Journal on Oct. 6.

Siavoshy previously spoke to the Business Journal in November 2021, when he was honored at the Business Journal’s 11th annual General Counsel Awards.

See this week’s Special Report starting on page 25 for more on nominees for the next GC event, which takes place on Nov. 10.

More M&A Activity

With funding lined up, what’s on tap for the company’s future in the defense sector?

“In the next six months, we expect to enter new parts of the market through acquisitions,” Siavoshy said.

The company’s been increasingly active on the acquisition front, with a trio of deals announced since 2021 (see story, this page).

He said Anduril expects “to continue accelerating” on the acquisitions front.

The group that Siavoshy currently oversees—including legal, security, compliance and M&A—now numbers just over 40 people. His team last year was about 25 people.

The group has expanded to nine lawyers from five a year ago, he told the Business Journal on Oct. 6, reflecting the growing complexity of the company’s business.

Defense Focus
Anduril, founded five years ago by Oculus VR developer Palmer Luckey—who just turned 30 last month—first garnered headlines from landing contracts for surveillance work along the US. border with Mexico, using AI-driven sentry towers and a connected operating system called Lattice.

Siavoshy says that while Anduril maintains a hefty presence in border security, “defense will naturally become a proportionately larger part of our business just by virtue of that’s where a lot of the growth is going to be.”

The future goals are large.

“We’re going into the next phase of our growth, which will be much larger, and in some ways more traditional-looking defense contracts, but still for emerging technologies,” according to Siavoshy.

He added: “That implies a greater emphasis on the legal and compliance infrastructure that a company like ours is required to have.”

At the start of the year, Anduril announced its largest contract win to date, a $1 billion deal with the U.S. Special Operations Command to lead its counter-drone systems integration work.

­Ukraine Presence

Siavoshy also sees a greater emphasis on international growth in the next two to three years.

Anduril’s role in seeking to push Russian invaders out of neighboring Ukraine has been getting more attention of late. Officials initially were coy over the company’s involvement in the conflict, but over the summer have been more explicit in Anduril’s role backing the Ukraine forces.

Luckey said in a Sept. 22 interview that Anduril will help Ukraine combat the Russian forces “for the foreseeable future.”

“We’ve been involved in helping Ukraine defend themselves from Russia since the second week of the conflict,” Luckey said.

He added: “We’ve had hardware and people there since the very beginning, and we continue to support them.”

Luckey said he already knew Ukraine President Volodymyr Zelensky from talks they had well before Russia’s invasion.

Latest Products

The past month has seen several new product announcements from the company.
New offerings include Mobile Sentry, a “ruggedized, mobile platform that uses artificial intelligence for highly accurate, persistent autonomous ground or air awareness.”

The sentry leverages “AI-enabled edge processing, continuous 360 monitoring and a variety of radars and sensors to autonomously identify, detect and track objects of interest in a given environment,” according to Anduril.

Also unveiled was Menace, a “first-of-its-kind integrated, expeditionary, secure, command, control, communications and computing platform.”

Menace gives “warfighters the ability to rapidly plan and execute missions at geographically dispersed and austere locations,” the company said this month.

Land, Air & Water

A trio of acquisitions by Anduril Industries Inc. since 2021, all on undisclosed terms, have moved the company’s reach from the depths of the ocean to the skies.

• In February it announced the purchase of underwater drone maker Dive Technologies of suburban Boston.

Dive Technologies makes what it calls “autonomous underwater vehicles” which can be used for a variety of defense and commercial mission types “such as long-range oceanographic sensing, undersea battlespace awareness, mine countermeasures, anti-submarine warfare, seabed mapping, and infrastructure health monitoring,” Anduril said.

• A year ago it bought Copious Imaging, a Massachusetts-area company focused on passive sensing technology to counter unmanned aerial systems.

Copious was spun off from the Massachusetts Institute of Technology’s Lincoln Laboratory about five years ago. It was reported to have more than 40 employees at the time the deal with Anduril was struck.

• In April 2021 it announced the acquisition of Area-I, a Georgia-based maker of unmanned aerial systems. The latest iterations of Area-I’s technology, the Altius 600M and 700M drones, “are designed to be flexible and adaptable and can accommodate multiple seeker and warhead options, with the 700M capable of carrying warheads as heavy as thirty-five pounds,” Anduril said this month.

The systems now have “loitering munition capability,” which can increase flexibility and effectiveness in hitting military targets.

An Altius 600 was successfully deployed into the eye of Hurricane Ian last month. In partnership with the National Oceanic and Atmospheric Administration, it “was launched from a NOAA Hurricane Hunter plane to collect and transmit atmospheric data back while orbiting around the storm,” the company said.

—Kevin Costelloe

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Kevin Costelloe
Kevin Costelloe
Tech reporter at Orange County Business Journal

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