April 8, 2025

The best defense is a good offense

Hi there, 

Military technology is entering its AI era.

Funding to AI companies targeting defense applications has reached $1.5B this year. At the current rate, this year will set a new record for the sector.

Public-company execs also have defense on the brain. 

Last quarter saw earnings call mentions of “defense” reach an all-time high, according to CB Insights’ Earnings Transcript Analytics.

Growing geopolitical tensions combined with AI advances are fueling the investment surge. 

Much of the activity centers on multidomain operations (MDO) technologies — integrating systems across land, sea, air, space, and cyber — where AI is accelerating mission planning, threat detection, and battlefield connectivity. 

Below, we look at:

1. Recent partnerships and the year’s biggest deals
2. Anduril's UUV announcement
3. Top investors in 2025

1. Recent partnerships and the year's biggest deals

Major defense contractors are forming partnerships with AI startups to pilot more autonomous capabilities. 

For instance, defense contractor L3Harris partnered with Shield AI in February to combine L3Harris’ electronic warfare capabilities with Shield AI’s autonomous flight tech. 

The next month, L3Harris invested in Shield AI’s $240M Series F alongside a16z, Booz Allen Hamilton, and others. 

That round is the 3rd-largest AI defense deal we’ve seen in 2025 so far, surpassed only by:

• Saronic’s $600M Series C. Saronic develops autonomous surface vessels for naval defense.
• Epirus’s $250M Series D. Epirus creates high-power microwave systems for counter-drone and electronic warfare applications.

Meanwhile, last week, SandboxAQ (an Alphabet spinout) raised a $150M extension to its $300M Series E from December. Its AQNav product is a real-time navigation system that combines AI and quantum sensing, with the aim of operating in areas where GPS is jammed or otherwise unavailable.

SandboxAQ is a leader in the quantum sensing market, alongside players like Q-Ctrl and Aosense — both of which partnered with Lockheed Martin last month on quantum-led navigation for GPS-denied environments.

2. Anduril's UUV announcement

AI defense leaders are also making gains in commercializing more advanced autonomous systems. 

Yesterday, Anduril unveiled an unmanned underwater drone equipped with torpedo-like capabilities. Anduril was last valued at $14B in August, making it the most highly valued private AI defense firm.

We featured Anduril in several areas of our recent AI in defense tech market map. Customers can use the below links to see how Anduril stacks up against competitors in these markets:

• Loitering munition unmanned aerial vehicles (UAVs): Drones that loiter over an area for extended periods of time, providing intelligence before engaging targets with a precision strike
• Tactical unmanned underwater vehicles (UUVs): Autonomous or remotely operated submersibles that carry out a range of military and strategic tasks below the water's surface.

CBI customers can unlock the full map here.

3. Top investors in AI defense tech in 2025

8VC and a16z rank among the top investors in AI defense tech this year — but they’re outpaced by one peer who has already backed 4 AI defense tech companies in 2025.

If you think you know who it is, reply to this email with your guess. We’ll share the answer in an upcoming newsletter.

CBI customers can see all of 2025’s top investors in AI defense tech here.

TLDR — Tech loves drama, right?

• Here’s the Deel: Keith O’Brien, a former Rippling employee, says Deel paid him €5,000/month to act as a spy — a plan allegedly pitched by Deel CEO Alex Bouaziz, who called it a “James Bond” idea. According to O’Brien’s affidavit, he was told to communicate via Telegram, was paid in crypto to “leave no trace,” and used codewords like “send that watch to London” to greenlight payments. Once Rippling was onto him, Deel’s lawyer supposedly advised him to “smash [his] phone with an axe.” O’Brien is now cooperating with Rippling. Deel denies wrongdoing — but its comms chief has exited, and IPO hopes may be dimming.

Source: X

• Save the drama for your Llama: Meta’s new AI model Maverick is scoring high on a popular benchmark — but the version being tested isn’t the same one developers can use. Meta says the top-performing model on LM Arena was an “experimental” chat-optimized version, leading critics to call the comparison misleading — and accuse Meta of gaming the system.

Source: X

• Hacker summit: The Everest ransomware gang — best known for breaching NASA and the Brazilian government — just got a taste of its own medicine. Over the weekend, the gang’s dark web leak site was hacked and defaced with a cheeky message: “Don’t do crime CRIME IS BAD xoxo from Prague.”
  
   
• Software showdown: UnitedHealth is taking Broadcom to court, saying the tech giant is demanding “exorbitant” price hikes for legacy software and threatening to pull the plug on critical systems. United says switching vendors would take years. It’s not the first complaint: AT&T made similar noise last year after a reported 1,050% VMware price jump.
  
   
• Humanoid hype: Figure AI CEO Brett Adcock claimed his robots were doing “end-to-end operations” at BMW’s largest plant. In reality, BMW says just one robot is on-site, performing a single task during short production windows. The company hasn’t confirmed if more robots are active. Still, Figure has raised $700M+ and is reportedly seeking $1.5B more — even as scrutiny grows over how much of the humanoid robot boom is real-world progress vs. founder-fueled hype.

I love you.

Anand

@asanwal 

Co-Founder & Exec Chair

P.S. Defense tech isn’t the only area getting love from VCs. See other high-growth markets across the venture landscape here.

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