Lux Capital has announced $1.5 billion in fresh capital across two funds, a seed and early-stage vehicle and a growth fund so the firm can continue backing companies from cradle to exit while developing emerging tech markets. The raise brings Lux’s assets under management to $7 billion and provides the firm ample dry powder as competition heats up for dual-use technologies and AI infrastructure plays.
Why LPs Got Behind Lux During a VC Slowdown
Fundraising has also been tight for venture: A PitchBook analysis said that last year was a 10-year low in new VC funds. But capital continues to cluster around managers demonstrating differentiated theses, deep technical networks and real outcomes. Lux checks those boxes, placing itself at the crossroads of government demand, national security priorities and AI adoption in regulated industries.
“We’re no longer seeing defense technology as contrarian, but rather mainstream,” said Howard Diamond, who chairs the firm’s Mergers & Acquisitions Area and dedicates a significant amount of his practice to sector-focused dealmaking.
“That shift is due to geopolitical risk, requirements for modernization and an evolution in procurement pathways to bring in non-traditional system integrators,” he added.
That evolution, combined with mission-critical AI workloads and the buildout of data, chips and model infrastructure, has revised LP allocation playbooks towards firms that can underwrite complex, capital-intensive innovation.
Defense and AI Bets Are Paying Off Early
Lux bet on defense early, backing Anduril at the seed stage; its most recent valuation was $30.5 billion. The firm also put money into Applied Intuition, whose autonomous systems and simulation tools have received Pentagon contracts and at one point had a private market valuation of about $15 billion.
On the AI side, Lux made early bets on foundational and creative-AI enablers such as Hugging Face and Runway. It also supported MosaicML, which was bought for $1.3 billion by Databricks — testament to demand for model tooling and training platforms that can decrease the cost and time of deployment.
Realized outcomes extend beyond software. Recursion Pharmaceuticals, an AI-powered drug discovery company in the Lux portfolio, went public and surgical robotics pioneer Auris Health was sold to Johnson & Johnson for up to $6 billion. And for LPs, that hard-tech/AI blend of payouts is proof that Lux’s dual-use/frontier thesis can actually convert into liquidity and not just paper marks.
How the new fund will probably be used across sectors
And while the firm hasn’t broken down a sector-by-sector split, anticipate that the strategy will tilt toward autonomy, software-defined defense, AI infrastructure and robotics — categories where Lux possesses repeatable pattern recognition. Dual-use is still the connective tissue: Those products that serve commercial markets but also have high bars for government customers are more likely to compound defensive moats through regulatory know-how, security accreditation, and data moats.
Even for later-stage investments, $1.5 billion gives Lux the freedom to take primary stakes in larger early rounds and provide meaningful support for growth financings and capital-intensive R&D with longer runways. It matters in categories such as advanced sensors, edge compute and next-gen manufacturing where technical diligence is deep and scaling demands both specialized talent and patient capital.
The whole ecosystem is moving in that direction — reform in procurement is opening doors for startups, through vehicles facilitated by entities like the DIU, and enterprise buyers are piloting-to-production AI deployment. That, for portfolio companies, means a more pristine commercialization path, from small-scale contracts to programs of record and multi-year enterprise agreements.
What This Means For Founders & Competitors
For founders, this fresh capital from Lux means an even more competitive term sheet environment in defense and AI, especially for teams with differentiated IP, strong security posture, and early revenue from government or critical-infrastructure customers. Anticipate sharper technical due diligence and an emphasis on proof of repeatable sales motion in complex procurement cycles.
For other venture firms, the raise illustrates a market bifurcation: Generalist managers are seeing slower LP commitments while specialists with clear performance edges and exit histories continue to scale. The bar is getting higher — fund size isn’t the story alone anymore; it’s about the ability to work through regulatory complexity, attract talent with clearances and secure partnerships with primes and system integrators.
On one hand, that’s a record fund that can only be read as a referendum on the staying power of defense and AI as venture categories, and on the other an indication of capital coalescing behind technologists who are able to translate bleeding-edge science into products you can put in the field. Lux has $1.5 billion to deploy and is already positioned to shape the next generation of dual-use winners.
