Archer teams up with Anduril and raises $430 million to build defense aircraft

Funding to defense tech companies has boomed in 2024 as geopolitical tensions rise, advancements in AI abound, and investors seek out a new growth area amid a broader tech sector slowdown. 

Archer Aviation wants in on the action. 

The aviation startup, which is building vertical take-off and landing (VTOL) aircraft, said Thursday that it has formed a new Archer Defense program, and has raised an additional $430 million in equity from existing investors Stellantis and United, as well as new institutional investors like Wellington Management and 2PointZero, an Abu Dhabi investment holding company. The raise brings Archer’s total financing to nearly $2 billion.

As part of that program, Archer has signed an exclusive partnership with weapons manufacturer Anduril to jointly develop a hybrid gas-and-electric-powered VTOL aircraft for critical defense applications. The companies shared few other details about the aircraft, but said that Archer will build them at its Georgia factory, where it is currently working with Stellantis to mass produce its Midnight electric VTOLs at scale starting this month. Archer plans to launch air taxi networks with the Midnight starting in 2025. 

Adam Goldstein, Archer’s founder and CEO, told TechCrunch that the companies chose to build a hybrid vehicle to account for the performance enhancements in speed, range, and payload required for defense operations, while still keeping the benefits of an electric system like a low noise profile and low thermal signature. 

Anduril has been leading defense tech funding this year. The startup raised a $1.5 billion Series F in August to scale production of its autonomous military systems, and has garnered a reputation for bringing a Silicon Valley mentality to defense production, which has a reputation for moving slowly. Anduril’s iconic, and at times controversial, founder Palmer Luckey – who previously founded Oculus VR and sold it to Meta for $2 billion – has ambitions to turn his company into the next great American defense contractor.

Anduril already manufactures several aerial systems, including somewhat affordable drones that it has reportedly sold to cash-strapped Ukraine to aid the country’s fight against Russia. But Anduril’s software will be the main component of its partnership with Archer. 

Lattice is Anduril’s AI-powered command and control platform that integrates data from various sensors to provide real-time situational awareness and is plugged into hundreds of military systems today, according to an Anduril spokesperson. It automates threat detection, tracking, and decision making, including decision making around closing the “kill chain.”

Archer will build the aircraft at its Georgia plant, where it’s currently working with Stellantis to start building its Midnight aircraft at scale by the end of 2024. Goldstein confirmed that the aircraft could be weaponized for military applications, though they might also be used for surveillance, reconnaissance, and rescue missions. He also noted that he hopes to have early prototypes of the defense vehicle built in 2025.

Archer claims by working together, the two companies can accelerate the speed to market of these vehicles at “a fraction of the cost of more traditional alternatives.” 

Archer has been involved in defense applications efore. The startup, which went public in September 2021 in a special purpose acquisition merger, formed an advisory body last year to support its growing relationship with the Department of Defense. And in August, Archer delivered its first Midnight aircraft to the U.S. Air Force for evaluation as part of a contract valued at up to $142 million.  

Goldstein said that deal is small fry compared to what Archer and Anduril are chasing with their partnership. They’re targeting a “potential program of record from the DOD,” according to Archer. Programs of record are budgeted acquisition programs with guaranteed funding over a set period, as Congress and the DoD would have approved a dedicated budget line for them.

A source who is familiar with government contracts told TechCrunch these are the holy grail of DOD contracts and very hard to get. Programs of record are typically reserved for established defense contractor and a few well-funded startups with a technology that the government undoubtedly needs. 

Goldstein said the aircraft Archer and Anduril are producing “fits very well into the DOGE framework of removing cost” while maintaining capabilities. 

DOGE, or the Department of Government Efficiency, is a committee led by Elon Musk and Vivek Ramaswamy that will advise President-elect Donald Trump on government spending. 

“The new administration and Elon talks about this kind of stuff, like, how can we have new companies go out there and build new stuff, totally rethinking the way things were done, challenging the norms, thinking on a first principles basis, looking at unmanned systems that cost a lot less,” Goldstein said.