The Electric: Amid an Industry Bloodbath, Electric Aviation Startups Have Raised $2 Billion
Many electric vehicle and battery startups are in danger of running out of money before they can generate profits. By contrast, electric aviation startups are enjoying fundraising success that resembles the industry’s party days of 2020 and 2021, when investors were throwing money at EV and battery startups.
In the latest example, Archer Aviation on Tuesday said it had raised $300 million from BlackRock, Wellington Management and other institutional investors to fund its development of hybrid electric aircraft for the military. That was on top of $430 million it raised just two months ago for the same project.
Archer didn’t ask for or need the latest money, CEO Adam Goldstein told me. Instead, he said, institutional investors reached out after the December fundraising to express interest in investing. Goldstein went for it, aiming to add manufacturing capacity at the company’s San Jose, Calif., factory (more on that below).
“I think defense tech is hot, and there are a lot of investors that are kind of knocking on our door,” Goldstein said.
Goldstein may be right that Archer struck a chord with its move to develop military aircraft, in addition to the civilian electric air taxis it hopes to commercialize later this year. (BlackRock and Wellington declined to comment.) Officials in Donald Trump’s administration have said they want the Pentagon to look at lower-cost startups for military hardware, to compete with big defense contractors such as Lockheed Martin and Northrop Grumman. After his confirmation last month, Defense Secretary Pete Hegseth said in a written statement that among his goals was “rapidly fielding emerging technologies.”
Private investors have also been exceptionally open toward air taxi startups, investing more than $2 billion in three of the most prominent companies in just the last four months: In addition to Archer’s rounds, Santa Cruz, Calif.–based Joby Aviation has raised more than $1 billion in three deals since October, and Vermont-based Beta Technologies raised $318 million in a Series C round in December.
All three startups have research and development deals with the U.S. Air Force to develop electric helicopters. But in December, a senior Air Force officer told Aviation Week of a strategic shift—the military was now also seeking hybrid aircraft because all-electric helicopters would not have sufficient flying range.
The Air Force has not yet offered any contracts for hybrid aircraft, but Goldstein said Archer and its hybrid aircraft development partner—Anduril Industries—believe there will be such a program.
Goldstein said Anduril has software that designs weapons or aircraft to meet specified performance requirements. Archer plugged in what it thought the Air Force would need in a hybrid aircraft—“a thing that can go this fast, this far, carry this much stuff, can hover for this much time, those kinds of things,” Goldstein said.
The program helped Archer’s leaders grasp what they might need to build. “Then it was like, ‘OK, we have conviction that we can go and build that,’” Goldstein said. “The thesis is that if we could build that, we think we are in a really good position to go win a contract.”
With the new money raise, Goldstein wants to invest in production lines to make composite materials for the hybrid aircraft’s body in Archer’s factory. He is also considering investing in a company making next-generation silicon-based batteries that can deliver a significant, short burst of power for takeoff and landing.
Archer declined to say whether the investment would be in its current battery supplier—Molicel, a Taiwanese company that many industry hands regard as one of the world’s best manufacturers of high-power batteries. Molicel did not immediately respond to an email.
But Goldstein said Archer is testing the battery maker’s cells, with the objectives of building a production line in Archer’s factory, as well as stockpiling an inventory of cells as “a kind of natural hedge” in case the U.S. gets into a conflict with China, which now supplies the vast majority of the world’s batteries. “In the end, the supply chain all leads back to one country in batteries,” he said. “It looks very promising, something we’d like to invest in, that we’d like to make it work, and that’s what we’re going out and doing.”
Ultimately, Archer and its investors are betting on the new administration. “This is exactly in line with what the administration talks about, which is, ‘How do you go build lower-cost unmanned systems to help complement or replace some of the existing systems and build, like, the future of the programs?’” Goldstein said. “I’m pretty bullish on what’s possible to go build.”