See How Naval-Systems Unicorn Saronic Positions Itself as VCs Ramp Up Defense-Tech Bets
A look inside the pitch of a highly-valued startup that's pursuing military contracts.
Venture investors looking to tap the defense-tech boom need to get their heads around a very different kind of pitch, as slides from naval-systems unicorn Saronic show.
Out are hockey-stick graphs of user growth and anticipated revenues. In are dense, acronym-filled bullet points about “key engagements” and “robust lobbying efforts” that might lead to the holy grail, a “program of record.”
The nature of Pentagon contracting long made it a no-go land for startups, but Palantir, SpaceX, and more recently Anduril have shown what’s possible and broken the taboo. Now, with Silicon Valley investors including Founders Fund and a16z enjoying unparalleled influence in Washington and a fresh pot of $150 billion for high-tech weapons on offer, defense-tech is second only to AI — albeit by some distance — on VCs’ radar.
So far, seven defense-tech startups — SpaceX, Anduril, Helsing, Shield AI, Saronic, Epirus, and Hadrian — have raised $500 million in VC cash or more. You might call the group “the Capital Cannons Club.” Here at Newcomer, we’ll be doing more coverage of these heavily-funded defense-tech companies, whose businesses depend on obtaining long-term engagements and whose progress therefore can be hard to assess.
First up is Saronic, which raised a $600 million Series C in February, catapulting its valuation to approximately $4 billion and funding its flagship “Port Alpha” autonomous shipyard initiative in San Diego. We’ve got a fundraising deck that Saronic used to make its case last year. (Paid subscribers can see the newsworthy slides below.)
Saronic builds “autonomous surface vessels,” or put more simply, drone boats, along with the software to pilot them. It has six models that range from 6-foot skiffs to 150-foot small ships, which can be used for a variety of surveillance, intelligence-collection, and combat purposes. The smaller boats can be outfitted with missile launchers, and the larger boats can be configured for torpedoes.
Drone boats are not new to the Navy, but are expected to be a rapidly expanding part of its arsenal. They’re cheaper to build and operate than larger naval ships, and can be used in large numbers to “swarm” larger, more cumbersome enemy ships in combat scenarios.
The war in Ukraine made the Black Sea somewhat of a battle test ground for drone boats.
Saronic’s offerings also come at a time when the US Navy is coping with a shipbuilding crisis, with budget overruns and a shortage of technical talent leaving the US behind China in the race to modernize sea-based weapons systems.
Saronic has raised just under $850 million in VC funding to date, making it the fifth most capitalized defense-tech startup.
So far, Saronic has secured several one-off contracts from the military that provide funding for early prototyping and testing but are not permanent revenue streams. The real prize would be a big, ongoing procurement contract, known in industry lingo as a “program of record.”
Only a handful of US defense-tech companies have secured programs of record to date, including SpaceX, Palantir, Anduril, and Forterra.
Saronic suggests it can win by dominating the market for selling autonomous ships to the Navy, but some investors are skeptical of the winner-takes-all approach.
“The idea that one startup is going to be the primary provider of naval vessels is not how the DOD works,” one defense-tech investor said.
A spokesperson for Saronic disputed that characterization of the strategy and said the company plans to have customers far beyond the Pentagon, including civilian companies that have on-water operations.
We got our hands on a copy of Saronic’s May 2024 pitch deck to investors for its Series B funding round.
It’s not the most recent information, granted, but it paints a picture of how Saronic has been positioning itself to investors.
The company’s headcount is now over 700 and it’s expanding its footprint in Austin and San Diego. In April, it purchased the Louisiana-based shipbuilder Gulf Craft and absorbed its shipyard and production facilities. It has been capitalizing on the Trump administration's more than $150 billion push to modernize defense and homeland security when pitching to defense-hungry VCs.
The most recent defense budget allocated over $29 billion to enhance domestic shipbuilding, in addition to capital already designated for modernizing the US Naval Fleet. It’s a big opportunity for Saronic — but no maritime defense startup has landed a program of record yet, as far as we’ve been able to tell.
Saronic’s flagship drone boats are named Spyglass, Cutlass, and Corsair. Spyglass is around 6 feet long, Cutlass is 14 feet long, and Corsair is 24 feet long. Its three larger ships entering production are Mirage, Cypher, and Marauder, and are 40 feet, 60 feet, and 150 feet long.
Saronic estimated to investors that a program of record could bring in around $2.4 billion in revenue from its first three vessels in operation.
Its strategy to do this is to first land smaller contracts — namely CRADAs, which are cooperative research and development agreements, or other contracts for experimental development. These often involve Saronic building a small number of prototypes for the defense department to test on specific mission assignments, and are not guaranteed sources of cyclical revenue.
At the time of this deck, Saronic had landed around $17 million in R&D contracts from the defense department as well as two CRADAs.
According to more recent public disclosures, Saronic now has just under $33 million in government contracts.
Saronic claimed in 2024 to have a $300 million pipeline for potential contracts for the DoD’s Research, Development, Test, and Evaluation programs.
That year, the company was projecting $155 million in revenue for 2025. Saronic has since readjusted this revenue forecast to $400 million for the year, according to a source who was offered a Saronic investment via an SPV in January. That’s a steep jump for one year, considering that contracts take a while to dole out, even with a friendlier administration at the helm. Saronic declined to comment on any previous or potential SPVs.
Based on its pitch about its longterm goals, some of this revenue must inevitably come from clients outside of the DoD. In a slide on its longterm projections, possible avenues include selling its existing product line to the Coast Guard as well as state and local law enforcement officials in coastal regions. The startup also plans to sell its tech overseas to US allies.
Scaling up its production ahead of sales comes with financial risk, but safety issues have also arisen. We heard that there was an accident involving a Saronic vessel off the coast of Catalina Island earlier this year. Saronic declined to comment.
Defense investors have been optimistic about Saronic’s path to landing a program of record. The average time it takes a contractor to hit the milestone is around 2 to 3 years, according to VCs we spoke with.
Palantir took 6 years before selling anything to the US government, and today its stock is at an all time high. Anduril cut that time down to just one year. By defense company standards, Saronic is just getting started.
Note: This post is too long for your email. To review the deck in full, click here.