# Defense startups can raise less at a lower price

Markdown copy of https://realalpha.app/s/defense-startups-can-raise-less-at-a-lower-price/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy.

- Speaker: [Trae Stephens](https://realalpha.app/people/trae-stephens/) · Anduril
- Host: [David Friedberg](https://realalpha.app/people/david-friedberg/) · CEO, Ohalo · Founded The Climate Corporation, sold to Monsanto for about $1.1B in 2013.
- Show: All-In
- Episode: [The State of Modern War: Palantir & Anduril Execs on Drones, AI, and the End of Traditional Warfare](https://realalpha.app/v/mjNP5IOzCbA/), Apr 6, 2026
- Moment: 27:39 to 30:47 of the episode (3 min), playing on https://realalpha.app/s/defense-startups-can-raise-less-at-a-lower-price/; the episode from there: https://realalpha.app/v/mjNP5IOzCbA/?t=1659

## Quote

> “But you can also **raise less at a lower price**.”
> — [Trae Stephens](https://realalpha.app/people/trae-stephens/) at [29:36](https://realalpha.app/v/mjNP5IOzCbA/?t=1776) · All-In

## Takeaways

1. High valuations can create unnecessary risk for a company.
2. Fundraising should fit the business’s actual needs.
3. Anduril aims to lower its revenue multiple each round.

## About this segment

Trae Stephens argues that inflated valuations can force startups into unrealistic growth targets. Anduril also deliberately lowers its revenue multiple with each funding round to build financial discipline.

From “The State of Modern War: Palantir & Anduril Execs on Drones, AI, and the End of Traditional Warfare”, Apr 6, 2026. [Watch the full episode](https://realalpha.app/v/mjNP5IOzCbA/)

## Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

[27:48](https://realalpha.app/v/mjNP5IOzCbA/?t=1668) there's dozens of VCs now. This has clearly become a hot space as defined by your successes. What's going to happen? So, these VCs are plowing money into hundreds of defense tech companies. from drones to satellites, to weapon systems, to software tools. How is this going to play out over the next couple of years as a venture investor with your knowledge about Anduril? I remember when I first got my offer letter from Palantir, we had this kind of high-low mix of salary versus equity compensation. And it gave three examples of how much your equity that was on your offer would be worth at different valuations. I think it was 1, 5, and 10, maybe, or 1, 5, and 20, something like that. And I remember talking to people around the company, they're like, 20, that's ridiculous. We're never going to be worth $20 billion. And, you know, I feel like

[28:40](https://realalpha.app/v/mjNP5IOzCbA/?t=1720) now it's like people are going out and they're like, our seed round will be priced at $20 billion. So I think there's been a big shift in just like the way that people think about these things. Some of that is good. Some of it's bad. I think on the good side, they're, you know, they're able to look at companies like Palantir, like SpaceX, like Andrel and say, there is actually a path to success. This isn't like an impossible market to innovate in. But at the same time, you know, there's a real tension around amount of capital raised and the valuations that are being applied to these rounds that add a tremendous amount of risk to the company that doesn't have to exist. You know, there's this famous scene from HBO's Silicon Valley where a CEO gets fired for kind of underperformance on the plan that they had presented. And Richard

[29:27](https://realalpha.app/v/mjNP5IOzCbA/?t=1767) Hendricks, the main character, says, you know, you could have raised less at a lower price. And he said, what do you mean? No one ever told me I could raise less at a lower price. And I think that's ultimately what my advice to these companies is. It's like, look, your product might be awesome. Seems like you're building a good team. I like the vision for what you're doing and the mission. But you can also raise less at a lower price. And I think that avoids playing chicken, ultimately, with trying to hit numbers that, frankly, don't even make sense. One of the things that we've been focused on at Anduril that I think maps back to our experience at Palantir actually is climbing down the multiples tree with every round. We never want to go and raise the next round at a higher revenue multiple than the prior round. And even the Series

[30:12](https://realalpha.app/v/mjNP5IOzCbA/?t=1812) H that you mentioned before is down pretty significantly from the Series G. And we're not doing that because investors wouldn't be willing to pay higher multiples. We're doing that because I believe the discipline is really, really important, especially heading into a medium term IPO. Emil Michael talked about this $200 billion of capital he wants to deploy. It's been reported he's hiring bankers to help him deploy it.

[30:35](https://realalpha.app/v/mjNP5IOzCbA/?t=1835) To counter your point, if there's a lot of capital flowing from the monopsony, if there's