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Defense technology startup Anduril Industries has raised $1.5 billion to accelerate production of autonomous weapons for the U.S. military and its allies as investment in the sector soars amid the conflict in Ukraine.

Peter Thiel’s venture capital firm Founders Fund, which provided the seed capital to create Anduril, led the latest round along with Virginia-based investor Sands Capital.

This latest investment values ​​the California-based startup at $14 billion, double its valuation in December 2022, when the company last raised money. Fidelity Management, Baillie Gifford and Franklin Venture Partners, the venture capital arm of Franklin Templeton, also participated in the round.

The seven-year-old company will invest the funds in new manufacturing facilities capable of “mass producing tens of thousands of autonomous weapons systems to meet the most urgent needs of the United States and our allies.”

Anduril will invest “hundreds of millions” of dollars in developing the first factory, called Arsenal-1, which will be located in the United States – but the company declined to disclose the location. A second plant could be built abroad.

Anduril’s rapid growth is a sign of a changing mood among venture capitalists, many of whom have abandoned their opposition to investing in defense technology since Russian President Vladimir Putin’s large-scale invasion of Ukraine in 2022. Venture capital investments in defense technology doubled to $33 billion between 2019 and 2023 amid a general decline in venture capital funding.

“The bottom line is that America and our allies don’t have enough equipment,” said Chris Brose, Anduril’s chief strategist and previously the late U.S. Senator John McCain’s top national security adviser. “We don’t have enough vehicles, we don’t have enough platforms, we don’t have enough weapons. That’s been the case for a long time,” he added. “Ukraine has made that clear.”

Anduril is the most prominent of a group of defense startups seeking to enter a sector where a handful of key companies – major defense contractors such as Lockheed Martin, Raytheon, General Dynamics and Boeing – have a firm grip on lucrative government contracts.

The company estimated that in the event of a major conflict, the United States would run out of ammunition in “less than eight days.”

Based in Orange County, California and led by virtual reality pioneer Palmer Luckey, the startup has made a name for itself in the US and British military, signing contracts to supply cutting-edge weapons systems to both militaries.

In 2022, the company won a $1 billion contract from the U.S. Special Operations Command to provide anti-drone technology. Earlier this year, it beat out Lockheed Martin, Northrop Grumman and Boeing to win a major contract from the U.S. Air Force to provide cooperative fighter aircraft.

Luckey co-founded Anduril in 2017 after leaving Facebook, which had bought his virtual reality headset business Oculus for $2 billion three years earlier.

The United States spends far more on defense than any other country in the world, much of it on military equipment. Its defense budget this year is $842 billion.

However, Brose said the government’s procurement of military technology has been slow and inadequate. “We are an order of magnitude below the amount of defense systems we are developing as America today,” he said.

Instead of highly complex, customized vehicles and weapons, Anduril will develop autonomous weapons that are as simple as possible, taking inspiration from the commercial manufacturing techniques of technology companies such as Elon Musk’s Tesla and SpaceX.

Anduril said Arsenal is “breaking down the traditional penchant for complexity in defence production by eliminating… unnecessary materials, parts and specialised processes”.