Exclusive-Counter-drone radar firm Chaos raises $510 million in defense tech boom

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By David Jeans

NEW YORK (Reuters) -Counter-drone radar manufacturer Chaos Industries raised $510 million in a funding round that closed last month, the company’s CEO said, the latest sign of booming investor interest in emerging military technology firms.

The Los Angeles-based company which makes radars that can detect drones – a key vulnerability highlighted in the Ukraine war – is now valued at $4.5 billion, Chaos CEO John Tenet told Reuters. 

The series D funding round, which has not been previously reported, was led by Valor Equity Partners. Tenet said the fresh capital will be used to ramp up manufacturing and scale its workforce. 

It comes just six months after the company’s previous funding round, and brings the total raised by the firm to $1 billion.

The rapid rise of Chaos, which was founded in 2022, comes as investors have poured almost $30 billion into defense tech companies this year alone, according to an August report released by Pitchbook. 

This investment wave has given rise to a new crop of multi-billion-dollar valued companies, including U.S. drone maker Anduril, valued at $30 billion in April, drone boat manufacturer Saronic, valued at $4 billion in February, and drone manufacturer Shield AI, valued at $5 billion in March.

Valor’s CEO Antonio Gracias, a longtime business partner of Elon Musk and most recently a top advisor to the Department of Government Efficiency (DOGE), is joining Chaos’ board, a Chaos spokesperson said. 

Valor has previously led funding rounds for Anduril, SpaceX and software company Defense Unicorns.

“We look forward to supporting them,” Gracias told Reuters, declining to comment further.

HOT DEFENSE TECH MARKET

While most defense tech companies have no clear path to profitability, investors are betting they will play a crucial role in modernizing the U.S. military amid tensions with China, and as Russia’s war with Ukraine has transformed the use of drones on the battlefield.

“It’s no secret defense tech has become one of the hottest categories in venture capital,” Tenet said. 

Chaos has previously announced a $2 million contract with the air force. Tenet said the company expects to announce a dozen contracts in coming months, but declined to share more details.

The company’s latest funding round comes as governments have prioritized defending against drone attacks since Russia’s full-scale invasion of Ukraine and the rising menace of drone incursions at airports.

At the center of Chaos’ pitch is that its sensors and radars can detect drones and small unmanned aerial vehicles from “hundreds of kilometers away,” Tenet said, as opposed to legacy systems that focus on identifying larger aircraft. 

(Reporting by David Jeans; Editing by Joe Brock and Raju Gopalakrishnan)