Silicon Valley Is Now Mass-Producing American Missiles
Covenant’s new Dallas factory marks the moment top VCs stopped funding drones and started funding cruise missiles. The defense industrial base is being rebuilt by people who never built it.
The factory floor where VCs used to fund drones
Covenant opened a 105,000-square-foot missile factory in Dallas on Wednesday. The company came out of stealth at the same time, and the investors behind it read like a who’s who of Silicon Valley’s nationalist pivot: Andreessen Horowitz, Peter Thiel’s Founders Fund, Lux Capital, 8VC, Aleph, Lightspeed, and Altimeter Capital.
They also announced $250 million raised across three funding rounds.
This is not a startup building autonomous drones for Ukraine. This is a company building long-range, heavy-payload cruise missiles for the U.S. military—and it was founded only two years ago, in 2024. The Dallas facility will produce 1,000 Anthem missiles in its first year of serial production, which starts in Q1 2027. The company plans to scale to 5,000 annually.
The war in Iran is now in its seventh month. U.S. weapons stockpiles are dwindling. And the Pentagon’s biggest primes—RTX, Lockheed Martin, Raytheon—are still making the Tomahawk-class systems that defined the late Cold War. Covenant says the Anthem costs a fraction of those legacy platforms.
The timeline is the story. From founding to a producing missile factory in under three years. That would have been impossible five years ago. Not because of regulation alone—but because the people signing the checks didn’t exist in this space yet.
The gap in the middle
Abby Denburg, Covenant’s president and chief growth officer, told CNBC there is a gap in the current defense ecosystem. On one side, short-range, low-payload drones—cheap, abundant, visible from Ukraine. On the other, strategic systems like the Tomahawk—expensive, slow to produce, built for a different era.
The Anthem is aimed at the space between. Affordable mass at strategic range.
Covenant also announced two Department of Defense deals on Wednesday: a test and qualification program with the Army, and a Navy contract to adapt the Anthem for maritime use.
The company currently operates production facilities in Germany and Northern Israel. It has over 200 employees worldwide. Its headquarters is in Washington, D.C.
That last detail matters more than it should. A missile company whose center of gravity is the capital—not a suburb near a Pentagon corridor, not an industrial park in Alabama. The founders understand where the leverage lives now.
Silicon Valley’s defense turn was always coming
Peter Thiel has watched his influence in Washington surge since the election of Donald Trump. He backed Trump’s 2016 campaign. He supported JD Vance’s Senate run in 2022. Vance previously worked at Mithril Capital, which Thiel co-founded.
Marc Andreessen was named to the Pentagon’s defense policy board this summer, alongside Blake Masters of Thiel Capital. Earlier this year, Andreessen announced a multibillion-dollar fund devoted entirely to U.S. aerospace and defense.
These are not hobbyists. These are people who built fortunes in software, understood that the old defense industrial base was a bottleneck, and decided to solve it with venture capital instead of lobbying.
The result is Covenant—a company that can move from founding to a producing missile factory faster than most primes can move from contract award to first article. That speed is what the Pentagon is desperate for, and that’s exactly why these investors are here.
Who wins, who loses
The primes lose first. Not overnight. But the narrative that Lockheed Martin or RTX are the only players capable of strategic missile production just got harder to sustain. Covenant’s Anthem is designed to be a fraction of the cost. If the Pentagon buys in—if those two contracts translate into production orders—the prime’s pricing power erodes.
The service branches win second. The Army and Navy both signed deals with Covenant on Wednesday. They get access to a system that fills the gap they’ve been complaining about for years: affordable mass at strategic range. The question is whether procurement bureaucracy will let that happen fast enough to matter.
The VC ecosystem wins third. This is the proof point that defense is no longer a sideways interest for Silicon Valley investors. It is the center of the thesis. When Andreessen and Thiel allocate billions to aerospace and defense, other funds follow. The next wave of defense startups won’t be outliers—they’ll be expected.
What happens next
Covenant’s Dallas factory won’t produce its first missiles until 2027. That’s the long lead time of weapon certification, even for a company that moved faster than anyone expected. The real test will come after the first batches roll out: Can the Pentagon accept a non-prime as a trusted supplier of strategic missiles? Can the supply chain hold at 5,000 units a year? Will the primes fight the contract awards, and with what level of success?
The war in Iran is already testing U.S. stockpile depth. Every month of conflict without new production capacity increases the risk of gaps that no amount of lobbying can fix. Covenant’s factory is a bet that the industrial base can be rebuilt by people who don’t owe anything to the old one.
Whether that bet pays off depends on how quickly Washington allows a new kind of defense contractor to become a legitimate one. The money is here. The talent is here. The factories are breaking ground. The only question left is whether the system can absorb them.
It may not have a choice.