In February 2024, Anduril Industries announced an agreement with the US Department of Defense (DoD), the latest in a long series of contracts. The defense tech company will join Microsoft and take a lead role in the development of the U.S. Army’s IVAS, or Integrated Visual Augmentation System. This deal is intended to provide military and defense personnel with advanced augmented reality capabilities and is reportedly valued at over $20 billion. This announcement reflects a wider shift within the defense sector: established government contractors are increasingly unable to meet many of the military’s technological needs.

Anduril Industries was launched in 2017 by Oculus VR founder Palmer Luckey and is notable for its rapid rise and wide range of products. Since first providing surveillance towers to the U.S. Customs and Border Protection Authority in 2018, the company has launched dozens of platforms, notably in the fields of Unmanned Aerial Systems (UAS), Counter-UAS, and surveillance.  Anduril’s products are all built upon its flagship AI-powered Lattice platform which integrates data from various sensors and provides military personnel with a real-time, comprehensive understanding of the battlefield.
The IVAS project was originally launched in 2018 as a partnership between Microsoft and the U.S. Army. Its first models were intended to be fielded in 2021 but numerous software and hardware issues, as well as frequent complaints by personnel testing the system, led to several delays. As of early 2025, the model has yet to be successfully fielded. 

Anduril’s success can be attributed to its Silicon Valley-oriented development approach, prioritizing rapid prototyping and iterative development. This starkly contrasts with the slow and bureaucratic processes traditionally encountered in the U.S. defense sector which has seen significant consolidation in recent decades. According to a 2022 DoD report, the defense sector has transitioned from 51 primary aerospace and defense contractors in the 1990s to just five. This consolidation has significantly reduced competition, hindering innovation within the U.S. military— at a time when hostile powers are investing billions to develop and integrate new technologies into their militaries.

In recent years, however, a new trend has been emerging; the rise of software-oriented defense technology startups. These companies prioritize sophisticated software, sometimes paired with cost-effective, attainable, and easily replicable hardware.

The rise of companies such as Anduril reflects a shift in the US DoD procurement approach, whose long-winded, multi-year process has long proven incompatible with the business models of technology startups, which typically operate under limited funding and short timelines. The conditions enabling Anduril’s rise come from efforts from both the Defense establishment and Silicon Valley to create a landscape more tenable for startups.

Efforts by the DoD include the creation of alternative acquisition pathways and initiatives dedicated to identifying and integrating new technologies into the military. At the same time, many defense-oriented ventures have emerged from Silicon Valley, especially in response to the rising demand for data analytics and AI services.

The rising prominence of Anduril signifies a wider pivot towards software-driven defense startups in the U.S. military’s acquirement and deployment of technology. This transition necessarily raises regulatory challenges. In order to keep up with the rapidly evolving pace of military technology, procurement frameworks designed for large-scale defense programs must evolve to accommodate the fast-moving nature of software innovation.