Venture capital investments in the Greater Los Angeles region more than doubled to $5.8 billion in the second quarter, compared to a year ago, as investors poured money into the area's defense tech and aerospace companies amid escalating geopolitical tensions.

Costa Mesa, California-based defense tech 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 would use the money to invest in scaling up its production, hiring, taking big swings on products and capabilities and other efforts such as its mergers and acquisitions strategy.

Anduril, which manufactures 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 that it says will help modernize communications on the battlefield. Anduril employs more than 6,000 people and has a valuation of $30.5 billion.

Venture capital firm Founders Fund led the recent round with a $1-billion investment, marking the firm's largest check to date, said Founders Fund partner and Anduril executive chairman Trae Stephens in a Bloomberg TV interview in June.

The company's recent fundraising round is an example of strong investor interest in defense tech and aerospace, which venture firms believe is ripe for disruption, with startups taking market share from incumbents such as Lockheed Martin and Northrop Grumman.

Globally, venture capital investments in defense tech is on the rise. Already, the funding in this category has outpaced last year, according to CB Insights. For the first half of 2025, investors allocated $11.1 billion in venture capital to defense tech companies, compared to $8.2 billion in the full year of 2024, CB Insights said.

Investors are eager to jump on an area of growth that has a lot of support from the government, as the U.S. enters a period in which defense and the geopolitical arena is at the forefront, analysts said. The world is being rocked by multiple international conflicts, including Russia's ongoing war on Ukraine and Israel's battle 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, head of insights at CB Insights. "We're starting to see a lot of support from the government in particular, with an increasing number of investors hopping on the defense tech train."

Southern California, long an aerospace and defense tech hub, is benefiting from the investor interest, with the area's companies representing nine of the top 30 private businesses globally in defense tech that have received the most venture capital financing, according to CB Insights.

Local companies said they were attracted to Southern California because of its strong talent pool, with nearby universities like Caltech and USC Viterbi School of Engineering.

Going back to World War II and the Cold War period, key defense contractors like Northrop Grumman and Hughes were built in the South Bay area, making the region a crucial locale for the defense and aerospace industries, said Professor Dan Wadhwani, director of the Lloyd Greif Center for Entrepreneurial Studies at the USC Marshall School of Business. As startups build new technologies, they will need to integrate them with other existing systems, he added.

"The proximity to key players within the defense industry makes L.A. a prime place for capitalizing on the growing trends towards defense spending," he said.

Last quarter, defense tech and aerospace companies represented the top four businesses receiving venture capital, according to CB Insights. Anduril led the way, followed by Redondo Beach-based Impulse Space, which raised $300 million, Hawthorne-based Chaos Industries that had a $275-million funding round and L.A.-based spacecraft manufacturer Apex, which raised $200 million in the second quarter, CB Insights said.

Chaos Industries makes radars that provide warning and tracking against unmanned aerial systems, missiles and aircraft. The company, which has more than 100 employees, raised a total of $490 million since it was founded in 2022. The funding will go toward hiring and increasing the company's manufacturing capabilities, said Chief Strategy Officer Will Hurd.

Hurd said he remembers when he worked at an investment bank in 2021 and most investors did not want to fund companies where the government was their client because there was a fear or lack of understanding of how that process worked. Now, that's changed and evolved, with a wave of defense tech and aerospace companies, including Chaos Industries.

"Now the adversaries have gotten more sophisticated, and we have to match that," Hurd said.

Impulse Space, which makes space vehicles, said there has been surging customer demand. The company said it has more than 30 signed government and commercial contracts worth nearly $200 million in value and the additional venture capital funding will go toward hiring, scaling production and accelerating its research and development.

"We've proven that we can build fast and fly successfully," said CEO and founder Tom Mueller in a statement. "Now, the market is demanding more."

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