Defense Report
Driving factors, Geopolitical Landscape, Golden Dome, Financial Outlook and Companies Updates
July 2025
Eva Cassman, Edoardo Zarghetta for the America 2030 sector research.
1. Driving Factors
Government Spending:
The US defense budget is at a historic high of $849.8 billion for FY2025, with $73.4
billion for the National Intelligence Program. This sustained investment is the primary engine for sector growth and modernization, supporting both established contractors and innovative tech entrants.
Technological Innovation:
The Department of Defense is accelerating R&D, with the Defense Innovation Unitbudget surging from $70 million (2023) to $983 million (2024). Key focus areas include artificial intelligence (AI), autonomy, hypersonics, cybersecurity, and space technologies.
Secondary Market Activity:
Secondary-market transaction volumes hit $150 billion in North America (2024), with 57% LP-led deals, reflecting high liquidity needs and portfolio rebalancing. Investors are drawn to defense for its resilience, strong cash flows, and government-backed demand.
2. Geopolitical Landscape
Rising Global Tensions:
Heightened conflicts involving China (Taiwan, South China Sea), Russia (Ukraine), and the Middle East (notably the Iran-Israel confrontation) are fueling defense modernization and intelligence priorities. NATO’s budget has reached $1.5 trillion, and allies are increasing their own military spending.
Middle East Flashpoints:
The June 2025 Iran-Israel conflict reignited energy and market volatility, with oil prices spiking to $75–$90/barrel and defense/cybersecurity stocks outperforming as nations ramped up military and intelligence spending.
Asia-Pacific:
US-China rivalry is driving an arms race in the region, with surging defense budgets in Australia, Japan, and Taiwan, and growing investment in naval, missile, and AI technologies.
Cyber & Information Warfare:
State-sponsored cyberattacks and disinformation campaigns are escalating, with both public and private sectors investing heavily in next-generation cybersecurity and intelligence systems.
3. Golden Dome Initiative
Program Overview:
Announced in January 2025, the Golden Dome is a multi-layered, Manhattan Project-scale US missile defense shield, modeled after Israel’s Iron Dome but expanded to include space-based sensors, interceptors, and AI-driven battle management.
Scope & Technology:
Land, sea, and space-based interceptors
Space-based sensors and directed energy weapons
AI integration for rapid threat detection and response
Budget & Timeline:
Initial $175 billion commitment (with projections up to $800 billion over 20 years); $25 billion already allocated for early development.
Industry Impact:
Major beneficiaries include Lockheed Martin, RTX (Raytheon), Northrop Grumman, Boeing, L3Harris, Palantir, Anduril, and SpaceX. The initiative is expected to drive a new wave of M&A, secondary-market activity, and public-private partnerships across the sector.
4. Financial Outlook
Market Growth:
The US defense market is projected to reach $320.86 billion in 2025, expanding at CAGR of 3.58% through 2030.
Intelligence Market:
The global defense communication intelligence market is forecast to grow from $23.13 billion (2025) to $40.53 billion (2034), driven by AI, real-time intelligence, and secure communications.
Investor Trends:
Secondary market: Robust, with record dry powder and strong demand for mature, government-backed assets.
M&A/Exits: Improving, but secondary sales remain a critical liquidity mechanism, especially for long-cycle defense/intelligence assets1.
Risks: Persistent inflation, higher-for-longer interest rates, and political/fiscal uncertainty (e.g., appropriations, trade policy) may affect timing and valuations.
Strategic Positioning:
Investors are prioritizing companies with exposure to AI, missile defense, space, and cybersecurity—areas that align with both government priorities and emerging global threats.
5. Defense Updates July 2025
Round up of the updates for the companies in the pipeline
Anduril - Series G - $2.5 billion
In June 2025, Anduril closed a $2.5 billion Series G financing led by Founders Fund, increasing its post-money valuation to approximately $30.5 billion, up from $14 billion in 2024.
Boom Supersonic - Regulatory win (no $)
Trump executive order lifts 52‑year U.S. ban on supersonic overland flight, unlocking potential domestic routes and validating Boom’s “boomless cruise” technology—marking a pivotal regulatory milestone likely to enhance investor confidence and expand market opportunity.
Chaos Industries - Upround - Series C $275M
This funding was co-led by New Enterprise Associates (NEA) and Accel, with participation from StepStone Group, Overmatch Ventures, Tru Arrow Partners, and Valor Equity Partners. The round brought the company’s total funding to $490 million and valued Chaos Industries at $2 billion. Proceeds will be used to advance its defense technology—particularly in advanced detection, monitoring, and communication systems—and to scale manufacturing capacity.
CX2 - Upround - Series A $31M
The funding will accelerate development of CX2’s intelligent, attritable electronic warfare (EW) systems—including autonomous drones and signals-intelligence payloads—responding to critical capability gaps in modern defense strategy. Institutional validation: Point72, a16z, 8VC and others affirm embedded confidence in CX2’s front-line EW mission. Strategic urgency: As EW becomes a threshold defense domain (especially influenced by lessons from Ukraine), CX2 is directly aligned with urgent Pentagon modernization priorities. Strong founding team: Founded by serial defense entrepreneurs including Nathan Mintz (co-founder of Epirus), Lee Thompson (ex‑SpaceX RF engineer), Porter Smith (Andreessen Horowitz partner), and Mark Trefgarne (former LiveRail founder).
Delian Alliance Industries
On July 29, 2025, Athens-based Delian Alliance Industries—which was founded by former Apple robotics engineer Dimitrios Kottas—announced a $14 million Series A funding round. The financing was co-led by Air Street Capital and Marathon Venture Capital, with additional participation from 201 Ventures, HCVC, Entropy Industrial Capital, and Nebular. This brings the company’s total raised capital to approximately $22 million, including prior seed funding from 2023. Founder Dimitrios Kottas brings deep robotics expertise from Apple’s Special Projects Group. • Capital efficiency: With limited prior funding (~$6M in 2023), the sizable Series A boost validates market-readiness and momentum. • Defense-industrial credibility: Real-world usage by Greek government and civilian agencies illustrates deployable capability and demand. • Compelling market opportunity: Delian targets maritime defense use cases underserved by major primes, focusing on low-cost, pre-deployable systems.
Elroy Air
Upround - Series B $50M - On May 28, 2025, Dean Donovan, co-founder of Mexican airline Volaris and Managing Director at DiamondStream Partners, joined Elroy Air’s Board of Directors, as announced by the company. Donovan is also a past investor in the firm.
Epirus
Upround - Series D $250M - While no post‑money valuation was disclosed, the company’s previous $200 million Series C round valued it at approximately $1.35 billion, and TechCrunch confirmed this new round maintains a valuation above $1 billion. Use of Proceeds: Scale production of its flagship Leonidas high-power microwave (HPM) system targeting drone swarms and electronic threats. Build U.S. manufacturing footprint and strengthen its supply chain resilience. Hire talent, upgrade internal systems, and expand into international and commercial markets. • Launch an immersive simulation center in Oklahoma (opening Q3 2025) to train personnel on counter‑drone operations.
Firestorm Labs
Firestorm Labs closed a $47 million Series A round on July 16, 2025, led by New Enterprise Associates with participation from Lockheed Martin Ventures, Booz Allen Ventures, Washington Harbour Partners, and others, including $12 million in venture debt from J.P. Morgan. The funding will scale its xCell expeditionary 3D‑manufacturing platform and expand production capacity.
Forterra
In May 2025, BAE Systems has partnered with Forterra to jointly integrate Forterra’s AutoDrive® autonomy stack into BAE’s ground vehicle platforms, expanding Forterra’s defense footprint and signalling strong institutional validation of its off-road autonomy capabilities.
Gallatin
Gallatin AI emerged from stealth in April 2025, raising $15 million in seed funding led by 8VC, with participation from Silent Ventures, Moonshots Capital, Timeless Partners, and Banter Capital. Its AI‑powered logistics platform, Navigator, is aimed at optimizing military supply chains in contested environments.
Hadrian
Hadrian’s July 2025 Series C round valued the company at $2.2 billion post-money, supporting its build-out of a major new defense manufacturing facility and further expansion of U.S.-based AI-powered industrial capabilities. Use of funds: Factory Expansion: ~$200 million invested in “Factory 3,” a 270,000 sq ft facility in Mesa, Arizona, expected to create ~350 local jobs; full operation by early 2026 . R&D & HQ Build-Out: Establishing a new 400,000 sq ft headquarters and development center in Torrance, CA, to support scaling. Factories-as-a-Service Model: Enables government and defense primes to contract dedicated production capacity for parts, assemblies—or full systems—across domains like shipbuilding and munitions . Hadrian Maritime Launch: A new division dedicated to AI-powered naval and shipbuilding manufacturing to strengthen U.S. defense capacity.
Havoc AI
Uncertain news on latest funding ($12M May 2025 led by Shield Capital).
Helsing AI
Acquisition & hardware expansion: In June 2025, Helsing agreed to acquire Grob Aircraft, aiming to integrate avionics and accelerate R&D in AI-powered aerospace systems. AI fighter pilot tests: Conducted live trials of its AI agent Centaur piloting a Saab Gripen E in real-world dogfight scenarios in May–June 2025—a world-first for fully operational AI flight integration.
In April 2025, Kodiak Robotics announced a business combination with Ares Acquisition Corporation II (AACT), valuing Kodiak at approximately $2.5 billion pre-money as it prepares to go public under the ticker KDK. This deal includes ~$551 million of trust cash and over $110 million in supporting investor commitments from ARK, Soros Fund, and others. The $2.5B valuation anchors Kodiak’s position among leading autonomous vehicle developers in private markets. The planned SPAC close (expected H2 2025) will bring Kodiak into public markets under the name Kodiak AI. Key strategic backers like ARK and Soros reinforcing the credibility of its business model and future scaling prospects.
Kraken Technology Group - Kraken Technology Group announced strategic funding commitments on June 23, 2025, led by NATO Innovation Fund and the UK’s National Security Strategic Investment Fund (NSSIF), along with participation from Superangel. The total amount was not disclosed, but the investment underscores high-level sovereign and intergovernmental support for scaling production, R&D, and international expansion in NATO partner markets.
Closing its Series A round, where I think $2-4 million are still missing. On the business front: Canadian airline Nolinor Aviation committed to purchasing production slots for Kona cargo aircraft for Arctic operations . Natilus joined with Kuehne + Nagel to explore blended-wing aircraft usage in air cargo logistics, focusing on emissions, operational efficiency, and route planning . Technology milestone: Granted a U.S. patent for its proprietary diamond-shaped cargo bay design, a key component of its Kona aircraft architecture. Natilus officially unveiled the interior design of its Horizon passenger aircraft in July 2025, revealing a fully fleshed-out cabin concept for its blended‑wing‑body (BWB) design.
OneBrief
Onebrief secured a $20 million Series C extension in June 2025, led by Battery Ventures, boosting its valuation to $1.1 billion, up from $650 million earlier this year.
Orqa
In December 2024, Orqa raised €5.8 million in a seed round. Though small in absolute scale, this round is highly strategic—it reflects accelerating investor confidence in Orqa’s vertically integrated drone stack and dual‑use positioning. The funds are earmarked for manufacturing scale-up, global market expansion (particularly in the U.S. and Europe), software and hardware product development, and building a Western-aligned alternative to major players like DJI.
Overland
Upround - Series A $32M - Credible backing: 8VC’s lead investment underlines strong confidence in Overland’s strategic terrain autonomy capabilities. Rapid advancement: Post-round, Overland unveiled Ultra—a self-driving ground vehicle capable of hauling supplies and launching drones into complex battlefield environments; early military tests are underway. Defense traction: Technology is being applied in programs including the Army’s RCV program, MARINE Corps’ NMESIS, and DARPA RACER, reflecting high-level DoD collaboration.
Picogrid
In June 2025, Picogrid secured a $1.1 million U.S. Army contract to deploy its Legion platform for battlefield system integration. The company also opened a new 25,000-square-foot manufacturing facility in El Segundo, California, to support growing defense demand.
Saildrone
On May 13, 2025, Saildrone closed a $60 million funding round led by Denmark’s Export and Investment Fund (EIFO). Regional defense endorsement: EIFO’s involvement underscores Saildrone’s growing strategic relevance within European maritime security. Market expansion: Capital will support establishment of Saildrone’s newly announced European HQ in Copenhagen, plus fleet deployment and local ops infrastructure. Operational validation: Launch of four Voyager-class USVs in June 2025 for maritime surveillance trials around the Baltic and North Seas, in collaboration with the Danish Armed Forces and NATO.
Saronic
In February 2025, Saronic raised a $600 million Series C round led by Elad Gil at a $4 billion valuation, quadrupling its value in seven months. Saronic purchased a 100-acre Louisiana facility (formerly Gulf Craft) to build 150‑foot unmanned warships (code-named “Marauder”), investing $250 million into the plant. This initiative is separate from Port Alpha and underway ahead of firm government contracts. Continued site scouting and partnership development for the planned next‑gen shipyard, reinforcing growth strategy and defensive industrial credibility.
In March 2025, Shield AI announced a $240 million F‑1 strategic funding round, boosting its post-money valuation to approximately $5.3 billion. Notable strategic investors included L3Harris Technologies and Hanwha Asset Management, alongside recurring backers Andreessen Horowitz, U.S. Innovative Technology Fund, Riot Ventures, and Washington Harbour.
Skydio delivered the first X10D drone systems for Tranche 2 of the U.S. Army’s Short Range Reconnaissance program, supplying a deploying Transforming in Contact unit with autonomous ISR systems at scale—demonstrating fast fulfillment, increasing production readiness, and strengthening defense market positioning. Skydio also secured a $9.4 million contract with the Norwegian Defence for its X10D drones, reinforcing its expansion in defense markets with advanced autonomous drone technology. Additionally, Skydio has been actively expanding its international defense footprint, including a recent €18 million contract awarded by Spain’s Ministry of Defence for X10D drones, highlighting strong demand in allied military sectors.
Skyways
Skyways secured a $37 million contract from the U.S. Air Force’s AFWERX division in June 2025 to scale its V3 autonomous cargo drone into full-rate production—marking a major strategic milestone validating its operational readiness and mass-manufacturing capabilities. Skyways secured a $5 million debt facility from Leonid Capital Partners to accelerate V3 drone production.
Tekever
In late April–early May 2025, TEKEVER closed a €70 million funding round, led by Ventura Capital with repeat participation from Baillie Gifford, the NATO Innovation Fund (NIF), Iberis Capital, and Crescent Cove Advisors. TEKEVER’s drone fleet has surpassed 10,000 combat flight hours in Ukraine, contributing to the destruction of over £3 billion in Russian assets, including S‑400 air defense systems. Ecosystem investment: The OVERMATCH programme locks in sovereign commitment, including UK Ministry of Defence participatory exercises like RAF StormShroud, enhancing future contract visibility and industrial durability.
In May 2025, Terradepth secured a five-year master services agreement with a major offshore energy company, leveraging its Ocean Data as a Service platform and Absolute Ocean geospatial solution to deliver autonomous hydrographic surveys for an APAC LNG export terminal at lower cost and faster timelines.
Zipline
In March 2025, Zipline surpassed a cumulative 100 million autonomous miles flown and exceeded 1.4 million total deliveries delivered — underscoring operational scale and reliability.