{"id":351359,"date":"2026-06-08T07:21:09","date_gmt":"2026-06-08T07:21:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-ca\/351359\/"},"modified":"2026-06-08T07:21:09","modified_gmt":"2026-06-08T07:21:09","slug":"is-l-a-s-defense-boom-real","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-ca\/351359\/","title":{"rendered":"Is L.A.’s Defense Boom Real?"},"content":{"rendered":"

In 2021, Los Angeles saw a rush of unicorns. Through generous funding cycles, approximately 18 companies reached unicorn status by the end of the year. <\/p>\n

The Covid-19 pandemic tech boom funneled money into software and business productivity platforms that would become critical in a world where remote work seemed permanent. After the dust cleared, sky-high valuations suddenly seemed indefensible, and the 2021 bubble burst. What followed was an austere, cautious funding environment that forced companies to either eat through their runway or, in some cases, accept a down round, losing their high valuation with it.<\/p>\n

A similar pattern is emerging. In 2025, 10 companies were inducted into the unicorn club, the most L.A. has seen since 2021. The majority of those companies work in aerospace and defense, potentially provoking a resurgence in a sector that once practically defined Los Angeles.<\/p>\n

The industry is flushed with both private and public investment. Amca, an El Segundo-based manufacturing company, recently raised $300 million in series B funding in late May, and with it came an updated valuation of over $1 billion. Most notably, Amca\u2019s induction into the unicorn club comes a mere 18 months after it was founded, making it the youngest member in a growing class of startups.\u00a0<\/p>\n

The company, which manufactures parts for aerospace and defense companies, is one of many in the South Bay reviving the area\u2019s storied history in wartime manufacturing. But as founders and venture capitalists navigate this budding industry, what happens when the funding dries up?<\/p>\n

\u201cThere\u2019s just not enough demand from the war fighter to support 10 or 15 or 20 different defense tech startups who are selling straight to the government,\u201d said Jai Malik, chief executive of Amca.<\/p>\n

\"\"\"\"Hardware: Amca manufactures parts for defense and aerospace customers. (Photo c\/o Amca)<\/p>\n

Today\u2019s defense manufacturing sector looks a lot like it did during the Cold War, when the U.S. funneled money into an unspoken arms race and spat out new innovations in weaponry, aerospace and satellite communications.<\/p>\n

A lot of that is due to the changing battlefield. Since the early days of the war between Russia and Ukraine \u2013 which saw mostly conventional skirmishes involving mechanized support from tanks and other heavy weaponry \u2013 the conflict is now dominated by cheap aerial drones that can pick off armored vehicles at a favorable cost ratio and expose infantry attempting to infiltrate enemy lines.<\/p>\n

U.S. adversaries like China also began developing weapons that were cheaper and nimbler compared to America\u2019s expensive, hard-to-scale primes.<\/p>\n

\u201cBy the 2020s, (China\u2019s) production rates of ships and missiles, their technological capability was no longer deniable,\u201d said Andrew Kreitz, co-founder of El Segundo-based weapons manufacturer Castelion Corp. \u201cWe used to kind of tell ourselves a story of, \u2018Ah, they\u2019ll never quite get there.\u2019\u201d<\/p>\n

That led to a surge of funding into new technology that could update the United States\u2019 arsenal of software and hardware to prepare for the battlefield. For the first time, generalist venture capital began joining in on the action. Thirty-eight percent of venture funding in Los Angeles in 2025 went into aerospace and defense startups, more than any other sector saw that year.<\/p>\n

\u201cI think when you think about traditional aerospace and defense, its long lead times, hardware, manufactured in a facility with people working things. But when you think about startups and you think about VC, this is all very techie stuff,\u201d said Jim Corridore, a senior analyst at PitchBook. \u201cSo that would be the reason why generalist firms in California would be investing in this space.\u201d<\/p>\n

But with all that funding, many of these companies have yet to fully reach proof of concept. Castelion is coming close \u2013 the unicorn company signed an agreement in May with the Department of Defense to manufacture 500 of the company\u2019s first low-cost hypersonic missile, Blackbeard. It\u2019s the first low-cost, mass fielded hypersonic weapon in the U.S. military\u2019s arsenal, and it was built by a company that is only four years old.<\/p>\n

\u201cThe government understands that if we are going to be able to raise private capital, do things at risk, build large production sites and invest in this technology, we need to know that as long as we execute, there\u2019s going to be an opportunity to sell these to the government,\u201d Kreitz said.<\/p>\n

The Defense department is the largest \u2013 and in many cases, the only \u2013 customer for these defense tech companies. There\u2019s no shortage of money there. The White House proposed a $1.5 trillion defense budget for the 2027 fiscal year, the largest amount requested in history.<\/p>\n

\u201cWe have a $1-trillion defense budget, which is the highest in U.S. history, rising steadily every year,\u201d Corridore said. \u201cWe have Europe steadily trying to increase its defense spending because they\u2019re a little bit afraid that they don\u2019t have a reliable ally in the United States anymore and they have the Ukraine war on their back on their doorstep. So they are increasing their spending as well.\u201d<\/p>\n

But founders are bracing for the downturn. Malik decided to build Amca after funding defense tech through his own venture capital firm, Countdown Capital. He admits not all companies are going to make it in defense.<\/p>\n

\"\"\"\"Jai Malik<\/p>\n

\u201cOver the past two or three years there have been a lot of defense system-integrated companies that are looking to pick off what Anduril does, or trying to compete with Anduril, or trying to compete with the primes not necessarily in the manufacturing world but more in the systems development and innovation world,\u201d he said. \u201cI think you will find, over the next two or three years, a fair amount of consolidation, or a lot of the wins going to Anduril and maybe one or two other companies.\u201d<\/p>\n

The likely reality is that a lot of companies will pivot, according to El Segundo mayor Chris Pimentel. Companies are going to have to use their resources \u2013 their technology stack, factories, and funding \u2013 to manufacture other things outside of defense applications.<\/p>\n

\u201cI think that dual-use piece was such an important part of driving investment, that these things have applications outside of the military, and that insulates a bit of the product from any kind of great consolidation,\u201d he said.<\/p>\n

\u201cI do think that a little ways away, some of the things that we\u2019re developing actually do have commercial applications,\u201d Kreitz said of Castelion. \u201cI think that we have the hope that a ways from now, we have an opportunity to commercialize some of these things.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"In 2021, Los Angeles saw a rush of unicorns. Through generous funding cycles, approximately 18 companies reached unicorn…\n","protected":false},"author":2,"featured_media":351360,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27],"tags":[140709,143661,48,52,51,47,50,49],"class_list":["post-351359","post","type-post","status-publish","format-standard","has-post-thumbnail","category-los-angeles","tag-amca","tag-castelion-corp","tag-la","tag-la-headlines","tag-la-news","tag-los-angeles","tag-los-angeles-headlines","tag-los-angeles-news"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/351359","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/comments?post=351359"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/351359\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media\/351360"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media?parent=351359"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/categories?post=351359"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/tags?post=351359"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}