Amidst rising geopolitical tensions and advancements in AI, defense tech companies are seeing a surge in funding, and Archer Aviation is the latest to capitalize on this trend. The aviation startup, known for its vertical take-off and landing (VTOL) aircraft, has raised an additional $430 million in equity from existing investors Stellantis and United, as well as new institutional investors like Wellington Management and 2PointZero, an Abu Dhabi investment holding company.

This funding brings Archer's total financing to nearly $2 billion, and the company is using this investment to launch its new Archer Defense program. As part of this program, Archer has signed an exclusive partnership with weapons manufacturer Anduril to jointly develop a hybrid gas-and-electric-powered VTOL aircraft for critical defense applications.

The partnership will leverage Anduril's AI-powered command and control platform, Lattice, which integrates data from various sensors to provide real-time situational awareness and automates threat detection, tracking, and decision making. Archer will build the aircraft at its Georgia factory, where it is currently working with Stellantis to mass produce its Midnight electric VTOLs at scale starting this month.

According to Archer's founder and CEO, Adam Goldstein, the companies chose to build a hybrid vehicle to account for the performance enhancements in speed, range, and payload required for defense operations, while still keeping the benefits of an electric system like a low noise profile and low thermal signature. The aircraft could be weaponized for military applications, but may also be used for surveillance, reconnaissance, and rescue missions.

Goldstein hopes to have early prototypes of the defense vehicle built in 2025, and the partnership aims to accelerate the speed to market of these vehicles at "a fraction of the cost of more traditional alternatives." Archer has been involved in defense applications before, having formed an advisory body last year to support its growing relationship with the Department of Defense, and delivering its first Midnight aircraft to the U.S. Air Force for evaluation as part of a contract valued at up to $142 million.

However, Goldstein notes that the deal with Anduril is much more significant, targeting a "potential program of record from the DOD." Programs of record are budgeted acquisition programs with guaranteed funding over a set period, as Congress and the DoD would have approved a dedicated budget line for them. A source familiar with government contracts told TechCrunch that these are the holy grail of DOD contracts and very hard to get.

Goldstein believes that the aircraft Archer and Anduril are producing "fits very well into the DOGE framework of removing cost" while maintaining capabilities. The DOGE committee, led by Elon Musk and Vivek Ramaswamy, will advise President-elect Donald Trump on government spending, and Goldstein sees an opportunity for new companies to rethink the way things were done and challenge traditional norms in the defense industry.

With this partnership, Archer and Anduril are poised to make a significant impact in the defense tech sector, and their success could pave the way for more innovation and disruption in this space.