Defense startup Covenant opens Dallas factory, announces $250 million in funding

Defense tech startup Covenant on Wednesday announced the opening of a 105,000-square-foot factory in Dallas to accelerate lower-cost missile manufacturing for the U.S. military.

The startup, which is coming out of stealth and is backed by Andreessen Horowitz, Peter Thiel's Founders Fund, Lux, 8VC, Aleph and Lightspeed, also announced $250 million in funding over three rounds.

"What we're seeing now is an understanding that new market entrants can play a critical role in the defense ecosystem, and we're seeing that in this administration," Abby Denburg, Covenant's president and chief growth officer, told CNBC's Morgan Brennan.

Founded in 2024, Covenant's Anthem long-range heavy-payload cruise missiles offer another option for the U.S. military in a class of weapons dominated by the defense primes, such as RTX's Tomahawk. Covenant said the Anthem is a fraction of the cost of legacy systems.

The company said its Dallas factory will produce 1,000 of its Anthem long-range missiles in its first year, beginning serial production in Q1 2027, eventually scaling to 5,000 annually.

That output is sorely needed as the war in Iran stretches into its seventh month and the U.S. weapons stockpile rapidly dwindles, according to multiple reports.

Denburg noted the need for high-tech weapons systems and the growth in "short-range, low payload" drones that have risen to prominence in the Russia-Ukraine war.

"There is a gap in the middle of that for affordable mass and strategic range, and that's the gap that Anthem was filling," Denburg said, adding that the company wants to lower costs without sacrificing payloads.

The company also announced two Department of Defense deals on Wednesday: one to accelerate a test and qualification program with the Army, and one with the Navy to adapt the Anthem for "Maritime" use.

Covenant currently operates production facilities in Germany and Northern Israel. The company has over 200 employees worldwide.

The Washington-based startup is yet another example of defense tech's growing leverage in the capital and role in reshaping policy and procurement.

PayPal and Palantir founder Thiel has seen his influence in Washington soar with the election of President Donald Trump. Thiel backed Trump's 2016 presidential campaign and supported JD Vance's Senate run in 2022. Vance previously worked at venture capital firm Mithril Capital, which Thiel co-founded.

Famed venture capitalist Marc Andreessen, who has seen his star climb during Trump's second term, was named to the Pentagon's defense policy board this summer, along with Thiel Capital's Blake Masters.

This year, Andreessen also announced a multibillion-dollar fund devoted entirely to U.S. aerospace and defense.