Anduril Industries—named after a magical sword from J.R.R. Tolkien’s “Lord of the Rings” novels—is central to Silicon Valley’s quest to take on weapons makers like Lockheed Martin and Northrop Grumman. Since its founding in 2017, Anduril has raised $3.7 billion in venture funding, incl The newcomers’ hope is that the Pentagon will eventually kill off what Luckey, the CEO of Anduril, calls “old legacy zombie programs,” like expensive jet fighters and attack helicopters, and instead buy autonomous weapons, like drones and uncrewed submarines. The U.S. military, Luckey and others say, needs large numbers of cheaper and more intelligent systems that can be effective over long stretches of ocean and against a manufacturing and technological power like China. 

Many teams inside Anduril are building only weapons that can be completed by 2027—the year Chinese President Xi Jinping has said his country should be prepared to invade Taiwan. The fictional sword for which Anduril is named is also called the “Flame of the West.” For decades, the U.S. government funded defense companies, like Lockheed Martin, to develop new weapons, ranging from stealth aircraft to spy satellites. But as the private-sector money available for research and development has outstripped federal-government spending, particularly in areas like AI, a new cohort of defense startups is using private capital to develop technology for the Pentagon. The amount of private capital flowing into the venture-backed defense-tech industry has ballooned, with investors spending at least 70% more on the sector each of the past three years than any prior year. From 2021 through mid-June 2024, venture capitalists invested a total of $130 billion in defense-tech startups, according to data firm PitchBook. The Pentagon spends about $90 billion on R&D annually.

The Pentagon is credited with helping to create Silicon Valley by plowing money into tech companies in the 1950s and ’60s, investing in electronics and buying microchips used in nuclear-missile guidance systems, satellites, and computers. That investment, says Paul Bracken, an emeritus professor of management and political science at Yale University, led the Defense Department to become, in effect, the “mother of all venture-capital firms.”

Excerpt from Sharon Weinberger, Tech Bros Are Betting They Can Help Win a War With China, WSJ, Aug. 9, 2024