Rising geopolitical tensions, coupled with a new administration advocating a more aggressive defense strategy, have led numerous startups to adopt dual-use business models, leveraging both commercial and military applications to secure sustainable revenue streams. This trend is particularly evident in the aerospace sector, where companies are rapidly aligning with defense priorities to tap into guaranteed funding opportunities.
Archer Aviation’s Shift Toward Defense
Archer Aviation, a California-based startup specializing in electric vertical takeoff and landing vehicles (eVTOLs), initially focused on developing an urban air taxi network across multiple cities in the U.S. and internationally. However, the company has recently shifted its strategic priorities toward defense applications, attracting substantial new investment to further this objective.
Having gone public in September 2021 through a special purpose acquisition company (SPAC) merger, Archer announced on Tuesday a $300 million equity raise from institutional investors, including BlackRock and Wellington. This latest funding round brings the company’s total capital raised to approximately $3.36 billion. It follows a significant $430 million round in December, which was earmarked for Archer’s newly launched Archer Defense initiative.
As part of this defense-focused strategy, Archer has entered into an exclusive partnership with Anduril, a prominent weapons manufacturer, to co-develop a hybrid gas-and-electric-powered VTOL aircraft specifically designed for critical defense missions. The two companies are working toward securing a Program of Record designation from the Department of Defense (DoD), which would guarantee long-term budgetary support for the project.
“We initially underestimated the scale and urgency of the defense market,” Nikhil Goel, Archer’s Chief Commercial Officer, told TechCrunch. “Now, we see a much larger opportunity in both scope and timing.”
Goel emphasized that Archer is uniquely positioned within the eVTOL sector to target a substantial defense Program of Record. “This isn’t just about signing contracts; it’s about securing a dedicated, budgeted defense program that ensures stability and scalability,” he said. While competitors like Joby Aviation and Beta Technologies have military contracts for testing eVTOLs in surveillance, logistics, and reconnaissance missions, Archer aims to carve out a dominant position with a guaranteed funding stream.
According to Goel, the $300 million investment will primarily accelerate Archer’s collaboration with Anduril in developing the hybrid VTOL. However, he refrained from providing further details about the company’s ongoing bid with the DoD.
A Booming Defense Market for eVTOLs
Archer’s pivot to defense aligns with broader industry momentum. The U.S. government has prioritized the rapid deployment of emerging technologies—such as artificial intelligence, drones, and counter-drone systems—to modernize military capabilities. The very attributes that make eVTOLs attractive for urban transportation—low noise, vertical takeoff, and electric propulsion—also enhance their utility in military operations.
Archer’s flagship electric aircraft, Midnight, demonstrates these advantages. Flying at approximately 300 feet, the Midnight generates significantly less noise than a conventional helicopter, blending into urban background sounds more effectively. “Noise profile is a key differentiator for us in defense applications,” Goel noted. “Traditional military helicopters are not only loud but also have distinct heat signatures, making them less suitable for covert missions.”
Midnight features 12 sets of engines and propellers—six in the front and six in the back—allowing for distributed propulsion. Unlike conventional helicopters that rely on a single large rotor and a tail rotor operating at high speeds, Midnight’s smaller, slower-spinning rotors significantly reduce noise levels. Additionally, eVTOLs like Midnight transition from vertical lift to winged horizontal flight, further minimizing rotor noise once airborne.
The Road to Commercialization
Despite its increasing defense focus, Archer remains committed to launching its first limited commercial air taxi service by late 2025 in the United Arab Emirates. By 2026, the company plans to expand operations to several major cities, including Los Angeles, San Francisco, New York, South Korea, and India. Archer has already secured strategic partnerships with major airlines—including United Airlines, Southwest Airlines, and IndiGo—to facilitate its air taxi networks. Additionally, in November 2024, a joint venture between Japan Airlines and Sumitomo conditionally agreed to purchase up to $500 million worth of Archer’s electric aircraft.
However, regulatory hurdles remain a significant challenge. To commercially operate eVTOLs in the U.S., Archer must obtain three key certifications from the Federal Aviation Administration (FAA):
- Type certification to approve the aircraft’s design,
- Production certification to demonstrate manufacturing capabilities that align with approved specifications, and
- Airworthiness certification to ensure safety for operational flights.
Although Archer is making steady progress toward these certifications, it has yet to receive any of them. Additionally, the company has not yet conducted manned test flights, a crucial milestone before carrying passengers. According to Goel, Archer plans to have a pilot fly one of its Midnight aircraft in the near future.
Scaling Up Production
The path to full-scale production is both costly and complex. Archer’s new manufacturing facility in Georgia—developed in partnership with strategic investor Stellantis—is nearing completion, with production expected to commence within the current quarter. By 2030, the company aims to manufacture approximately 650 aircraft annually. For 2024, however, Archer’s production goal remains modest, targeting only 8 to 10 aircraft from its Georgia and California facilities.
Adam Goldstein, Archer’s CEO and founder, told TechCrunch in October that most capital expenditures for the factory have already been allocated. Moving forward, the company will focus on scaling Midnight eVTOL production while simultaneously advancing its hybrid defense aircraft initiative.
Tuesday’s $300 million funding round brings Archer’s total available liquidity to well over $1 billion, ensuring financial stability for “multiple years” as the company progresses toward commercialization and defense implementation, according to Goel.
While Archer has yet to disclose its Q4 and full-year 2024 earnings, the company reported total operating expenses of $385 million for the first three quarters of the year, with adjusted expenses standing at $281 million. For Q4, Archer projected adjusted operating expenses between $95 million and $110 million. It remains unclear how much additional cost the development of a hybrid military aircraft will add to the company’s financials.
Archer’s shift toward defense not only provides a lucrative revenue stream but also positions the company as a key player in the evolving aerospace landscape—balancing the commercial air mobility revolution with national security imperatives.