This Week in Dual-Use

One of the benefits of taking some time off the newsletter is that when I sit down again I get to digest all that has happened in one go. It’s a wood-for-the-trees moment.

Having digested, a few things struck me. First, the number of defence tech fundraises continues to increase. You will see in the fundraising section below that they far outnumber the other sectors that I cover.

Second, and perhaps more interesting, the size of the fundraises continues to grow. And, more interesting still, the type of investor has changed.

JP Morgan Chase has now appeared in four defence tech deals in six months (Shield AI, Helsing, Hadrian and Castelion). And Carlyle is also dipping its toe in the water by investing in Castelion.

Why is that?

Geopolitics, yes. But also the maturation of the first wave of companies creating novel defence technologies.

Many companies that were startups two years ago are now building out complex manufacturing. Castelion's $1B Series C consisted of $800M of equity and $250M of revolving credit. The money will create manufacturing capacity at Project Ranger in Sandoval County.

Hadrian raised $1.4B to open more factories, having gone from two sites to four in about a year. And Shield AI's $2B round in March included $500M of fixed-return preferred equity plus a $250M delayed draw facility.

In Europe, Cambridge Aerospace is spending much of its $300M Series C on a solid rocket motor plant in Norfolk (Europe’s largest). Helsing’s $1.8B Series E is earmarked for expansion of manufacturing, including the first US plant in West Virginia.

And in February Quantum Systems took $178M of conventional debt from EIB, Commerzbank, Deutcsche Bank and KfW. It apparently building out production capacity across seven countries.

Little of this looks like venture capital anymore. That’s because once the financing need changes shape, the cap table has to change with it. And the people who like to fund factories are banks, credit funds, sovereign and pension pools etc.

Nothing about the underwriting has become more sophisticated - JP Morgan hasn’t suddenly developed a superior view on hypersonic glide bodies. What it has found is an asset class with government-backed revenue and physical collateral, which is exactly what balance sheet capital has always looked like.

What we haven’t seen much of yet, but what is almost certainly on the way, is consolidation.

Some of the above companies now have more cash than they can deploy organically. And the cheapest way to add a factory in a new country is to buy one. Below them sits a long tail of Series A and B companies that raised in 2024 and 2025 on the assumption that capital would keep arriving on the same terms.

The investor base that has just arrived is also the one that makes this happen. Advent, Carlyle and Blackstone have run buy-and-build in aerospace and defence for decades.

I expect the next twelve months to bring more deals where well-funded neoprimes absorb founder-led hardware companies with good product but no clear route to the next fundraise.

And finally, something I witness as an early-stage investor is that the next wave of novel defence technologies is already being born.

FUNDRAISING

(below is a summary of all fundraises from the last four weeks)

DEFENCE

Hadrian, an American ‘factory as a service’ company, raised a $1.4B Series D at a valuation of nearly $8B.

Castelion, an American developer of hypersonic missiles, raised a $1B Series C at a $13B valuation.

Cambridge Aerospace, a British developer of air defence technology, raised a $300M Series C at a $3.4B valuation.

Neros Technologies, an American developer of unmanned systems, raised a $250M Series C at a $2.5B valuation.

REGENT Craft, an American developer of of electric sea craft, raised a $240M Series B.

Singularity, an American developer of air defence technology, emerged from stealth with $80M in funding at a $400M valuation.

Smack, an American developer of AI for defence, raised a $61M Series B.

Heaviside, an American developer of precision munitions, raised a $60M Series B at a $600M valuation.

Terra Industries, a Nigerian drone manufacturer, raised a $52M seed round.

Gallos Technology, a British defence tech incubator, raised a $50M round.

Aurelius, an American developer of counter-drone laser technology, raised a $40M Series A.

Inleap Photonics, a German developer of counter-drone laser technology, raised a €20M seed.

Easy Aerial, an American developer of tethered drones, raised a $20M Series B.

Atlas Motion, an American company building a supply chain for drones, emerged from stealth with $11.4M.

Mara, an American developer of C-UAS interceptors, raised a $7M pre-seed.

Oshen, a British developer of wind- and solar-powered ocean robots, raised a £3.7M round.

Isengard Industries, an American manufacturer of precision-strike and counter-UAS technology, raised an undisclosed amount.

SPACE

Space Star Tech, a Chinese space company, raised a $297M Series D.

Muon Space, an American builder of satellite constellations for climate monitoring and national security, raised a $250M Series C.

Starcloud, an American orbital AI and data centre startup, raised a $250M Series A extension at a $2.3B valuation.

iSpace, a Chinese reusable launch company, raised $148M.

Letara, a Japanese developer of hybrid propulsion rocket systems, raised a $16M round.

Neuraspace, a Portuguese space domain awareness company, raised a €15.6M round.

Endeavor Optical Networks, an American builder of optical communications satellites, emerged from stealth with $10.8M.

QUANTUM, CYBER & AI

Alice, an American/Israeli cyber startup that monitors deployed systems to prevent jailbreaks and other policy violations, raised a $140M round.

Callosum, a British startup applying neural concepts to how computing infrastructure is built and operates, raised a $100M round.

Dirac Labs, an American developer of quantum positioning sensors, raised a $1.8M pre-seed.

GOING PUBLIC

Ursa Major, an American developer of hypersonic engines, announced plans to go public via a SPAC at a $2.3B valuation.

Nscale, a British AI cloud and data centre company, is seeking to raise as much as $3B in a US IPO.