Defense technology It was a hot topic last year — especially as: Gecko Robotics, Shield AI and True Abnormality Despite a string of large funding rounds, this year hasn't been a good year for the industry.
By mid-May, funding was less than half of what it was at the same time last year. Per Crunchbase dataThis is despite heightened tensions in the Middle East as the Ukraine war enters its third year.
In the first quarter, funding for startups in the military, national security, and law enforcement industries fell to $118 million, up from $459 million invested in these startups in the first quarter of last year. decreased by 74% from
(chart)
In the year to mid-second quarter, defense startups raised just $228 million, down 62% from the roughly $600 million they raised at the same point last year. report Anduril The company officially launches a $1.5 billion funding round at a valuation of $12.5 billion.
Where is the cash?
Speaking of Anduril, it was a software and hardware defense technology startup that helped get many people looking back at the industry in the second half of 2022. $1.5 billion Series E.
Venture investors are unwilling to invest in defense technology due to their own moral reasons or pressure from LPs, even though the technology developed by startups has been used by the military for decades. For this reason, it is often a difficult field for venture investors to sell.
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.
This resulted in a fundraising boom at the end of the year, with defense tech startups raising a staggering $802 million. Some of the big deals in the quarter included:
- Shield AI, a defense and aerospace startup developing AI pilots, Raises $200 Million Series F at $2.7 Billion Valuation in a co-lead round riot ventures and Thomas Tullof National Innovative Technology Fund During October. The round comes less than a year after the San Diego-based company raised $60 million in December 2022, giving it a $2.2 billion valuation.
- 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 anomalycompanies that develop hardware and software systems that support space safety and readiness. $100 million In a round led by riot venturesThe company's value has not been disclosed, but Bloomberg reported It hadn't reached $1 billion yet. The startup helps governments and commercial customers keep an eye on threats to assets in space, such as satellites.
Defense technology investment slows
But the first four and a half months of this year have looked different.
There are no nine-figure increases in this area. In fact, the biggest ones this calendar year are:
- This month, Kihei, Hawaii-based satellite tracking software developer privateer Raises $56.5M in funding round led by space-focused venture capital firm Aero X Ventures And then they bought 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 whole story of defense technology funding.
This industry is difficult to define. One of the biggest funding rounds this month is Scale AI nurture $1 billion 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.
As a result, funding for startups that are solidly active in this space is decreasing, but in many other overlapping areas, e.g. cyber security In the robotics sector, funding increased from the fourth quarter of 2023 to the first quarter of this year.
In cybersecurity, cybersecurity startups raised nearly $2.7 billion in the first quarter of 2024. This is a 69% increase from the previous quarter, when cybersecurity startups raised just $1.6 billion. Per Crunchbase data.
The same goes for robotics: Venture funding in the sector jumped from $1.4 billion in Q4 2023 to $2.1 billion last quarter, according to Crunchbase. data.
It's also important to remember that funding for defense technology is small, so one large round of funding can make a big difference. If Anduril raises $1 billion or $2 billion, it will certainly change the face of the quarter.
However, it is worth noting that there has been a significant slowdown in funding to this sector, even if only temporarily.
methodology
According to Crunchbase data, defense technology is defined by the military, national security, and law enforcement industries. Most of the announced rounds appear in the database. However, there may be a slight lag for rounds reported late 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.
