Venture capital investments in the Greater Los Angeles region more than doubled to $5.8 billion in the second quarter from a year ago as investors poured money into the area’s defense technology and aerospace companies amid rising geopolitical tensions.
Costa Mesa-based defense technology company Anduril received the most venture capital in the region last quarter, raising a $2.5 billion funding round, according to research firm CB Insights.
The company, co-founded by entrepreneur Palmer Luckey, said it will use the money to invest in increasing production, hiring, big swing products and capabilities, and other efforts such as its mergers and acquisitions strategy.
Anduril, which makes autonomous weapons systems, was recently awarded a $99.6 million contract to build a next-generation command and control prototype for the U.S. Army, which it says will help modernize battlefield communications. Anduril employs more than 6,000 people and is valued at $30.5 billion.
The venture capital firm Founders Fund led the recent round with a $1 billion investment, marking the firm’s largest check to date, Founders Fund partner and Anduril CEO Trae Steffens said in a Bloomberg TV interview in June.
The company’s recent fundraising round is an example of strong investor interest in defense technology and aerospace, which the venture firm believes is ripe for disruption, with startups taking market share from incumbents like Lockheed Martin and Northrop Grumman.
Globally, venture capital investment in defense technology is on the rise. Already, funding in the category has surpassed last year, according to CB Insights. Investors poured $11.1 billion into venture capital in the first half of 2025, up from $8.2 billion in the full year of 2024, CB Insights said.
Investors are looking to move into growth territory with strong government support as the United States enters a period of heightened defense and geopolitical focus, analysts said. The world is reeling from a number of international conflicts, including Russia’s ongoing war in Ukraine and Israel’s fight against Hamas in Gaza.
“We’re entering an administration, a regulatory period, and a broader geopolitical arena where defense is at the forefront of everyone’s minds,” said Jason Saltzman, CB Insights’ head of insights. “We’re starting to see a particularly strong level of support from the government, and more and more investors are jumping on the defense technology bandwagon.”
Southern California, long a hub for aerospace and defense technology, is benefiting from investor interest, with companies in the area representing nine of the top 30 private companies worldwide in defense technology that have received the most venture capital funding, according to CB Insights.
Local companies said they are attracted to Southern California because of its strong talent pool and nearby universities such as Caltech and USC’s Viterbi School of Engineering.
The South Bay Area was home to major defense contractors such as Northrop Grumman and Hughes during World War II and the Cold War, making the region a crucial location for the defense and aerospace industries, said Professor Dan Wadhwani, director of the Lloyd Greif Center for Enterprise Entrepreneurship. As startups create new technologies, they will need to integrate them with other existing systems, he added.
“Proximity to key players in the defense industry makes LA a prime location to benefit from the growing trend toward defense spending,” he said.
Defense technology and aerospace companies represented the top four companies receiving venture capital last quarter, according to CB Insights. Anduril led the way, followed by Redondo Beach-based Impulse Space, which raised $300 million; Chaos Industries, which had a $275 million funding round; and L.A.-based spacecraft maker Apex, which raised $200 million in the second quarter, CB Insights said.
Chaos Industries builds radars that provide warning and tracking against drones, missiles and aircraft. The company, which has more than 100 employees, has raised $490 million since its founding in 2022. The funding will be used to ramp up and scale up the company’s manufacturing capabilities, the chief strategy officer said.
Hurd said he remembers working at an investment bank in 2021 and most investors were reluctant to fund companies where the government was their client because of fear or a lack of understanding of how the process works. Now that has changed and evolved, with a wave of defense technology and aerospace companies, including Chaos Industries.
“Now the opponents have become more sophisticated and we have to match that,” Hurd said.
Impulse Space, which builds space vehicles, said customer demand has increased. The company said it has more than 30 signed government and commercial contracts worth nearly $200 million, and additional venture capital funding will be channeled into scaling back production and accelerating its research and development.
“We’ve proven we can build quickly and fly successfully,” CEO and founder Tom Mueller said in a statement. “Now the market demands more.”
