Funding for defense technology companies has skyrocketed in 2024 due to the increasing geopolitical tensions, advancements in AI, and investors seeking new growth opportunities amidst a broader slowdown in the tech sector.
Archer Aviation is getting in on the action. The aviation startup, known for developing vertical take-off and landing (VTOL) aircraft, announced on Thursday the launch of its new program, Archer Defense, and secured an additional $430 million in equity funding from current investors Stellantis and United, as well as new institutional investors like Wellington Management and 2PointZero, an Abu Dhabi investment firm. This brings Archer’s total funding to almost $2 billion.
As part of the new program, Archer has partnered exclusively with weapons manufacturer Anduril to collaboratively design a hybrid gas-and-electric-powered VTOL aircraft for essential defense applications. While the specifics of the aircraft are scarce, both companies mentioned that Archer will manufacture them at its factory in Georgia, where it is currently working with Stellantis to mass produce its Midnight electric VTOLs starting this month. Archer intends to launch air taxi networks using the Midnight aircraft in 2025.
Adam Goldstein, the founder and CEO of Archer, explained that the decision to create a hybrid vehicle was to enhance speed, range, and payload for defense operations while retaining the advantages of an electric system such as low noise and thermal signature.
Anduril has been a key player in defense technology funding this year, raising $1.5 billion in August to expand its production of autonomous military systems. The company, founded by Palmer Luckey of Oculus VR fame, aims to revolutionize defense production with a Silicon Valley mindset, typically known for its slow-moving nature. Anduril’s software will play a significant role in its collaboration with Archer.
Archer’s involvement in defense applications is not new. The startup, which went public in 2021 through a special purpose acquisition merger, created an advisory committee last year to support its growing partnership with the Department of Defense. In August, Archer delivered its first Midnight aircraft to the U.S. Air Force for evaluation as part of a contract worth up to $142 million.
Goldstein believes that the partnership between Archer and Anduril can expedite the market entry of these vehicles at a fraction of the cost of traditional alternatives. They are aiming for a potential program of record from the Department of Defense, which entails a budgeted acquisition program with guaranteed funding over a specified period – a significant achievement in the defense industry.
Overall, the collaboration between Archer and Anduril aligns well with the Department of Government Efficiency (DOGE) framework, as they look to reduce costs while maintaining capabilities. Goldstein emphasized the need for new companies to rethink traditional approaches, challenge norms, and develop cost-effective unmanned systems, echoing sentiments expressed by the new administration and prominent figures like Elon Musk.
