Across the private markets, one of the more familiar stories goes something like this: defense and aerospace are booming.
It makes sense—as companies like Anduril (last valued at $30.5 billion) appear more important than ever, and newer entrants to the sector attract capital and gain traction. (For example, Sarconic, which is building autonomous vessels, raised $600 million in a Series C in February.) But recent numbers tell a more complex story for the space as a whole, especially when it comes to private equity.
PE–backed deals in the sector fell sharply in Q2:PitchBook data shows a 32% year-over-year decline in aerospace and defense deal count, a drop the research platform links to tariffs and broader geopolitical uncertainty. The pullback is as stark as it is surprising—particularly given a 61% decline in defense deal count for Q2.
“We are also surprised by the slowdown in defense dealmaking,” Jim Corridore, PitchBook’s senior industrials analyst, told Fortune via email. “We think the new $1 trillion defense budget, NATO commitments to raise defense spending, and ongoing geopolitical issues all support strong defense spending, which should continue to encourage deals. We just think tariffs and the new defense budget, with shifting priorities, may have slowed decision-making in Q2.”
And Corridore emphasized that the overall outlook remains bright, and that this data ultimately represents a bump in the road more than a crisis. He expects activity to rebound in the second half of 2025.
“Aerospace and defense funding remains strong,” he wrote to Fortune. “There’s still a lot of VC and PE interest in the space. Many exciting new technologies are getting funded, and there is a healthy pipeline of startups. We don’t see any stagnation or trouble ahead for defense tech.”
You’re invited…In just a few weeks at Brainstorm Tech, we’re hosting a powerhouse defense tech panel with leaders from Anduril, Vannevar Labs, and Allen Control Systems. That’s just one highlight of our annual flagship retreat in Deer Valley. We’ll also hear from Oura’s Tom Hale, DoorDash’s Tony Xu, and Wyclef Jean—plus many more. I’ll be leading several VC-focused conversations, including a Future of Venture Capital Insight Exchange featuring Felicis, Gradient, Eclipse, Canvas Prime, Sapphire, and others. You can learn more about the program here, and if you’re interested in joining us, you know where to find me.
See you Monday,
Allie Garfinkle
X:@agarfinks
Email:alexandra.garfinkle@fortune.com
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Joey Abrams curated the deals section of today’s newsletter.Subscribe here.
Venture Deals
- Nuro, a Mountain View, Calif.-based self-driving technology company, raised $203 million in Series E funding from Uber, BaillieGifford, IcehouseVentures, Kindred Ventures, NVIDIA, and Pledge Ventures.
- MethodAI, a Boston, Mass.-based developer of image-guided surgical navigation technology, raised $20 million in Series A funding. A private family officer led the round and was joined by ClevelandClinic and JobsOhio Growth Capital Fund.
-Irys, a London, U.K.-based datachain, raised $10 million in Series A funding. CoinFund led the round and was joined by Hypersphere, TykheVentures, VarrockVentures, Breed VC, EchoGroup, AmberGroup, and WAGMIVentures.
- Cascala Health, a Boston, Mass.-based AI-powered clinical intelligence platform, raised $8.6 million in seed funding. FlareCapitalPartners and EniacVentures led the round and were joined by others.
- Agenda Hero, a San Francisco-based developer of an AI-powered calendar program, raised $5.6 million in funding. Upfront Ventures led the round and was joined by Precursor Ventures and existing investor K9 Ventures.
Private Equity
- Thoma Bravo agreed to acquire Dayforce, a Minneapolis, Minn.-based human capital management technology company, for $12.3 billion.
- AuthenticBrands, backed by GeneralAtlantic and others, agreed to acquire a 51% stake in Guess?, a Los Angeles, Calif.-based clothing brand, in a deal worth $1.4 billion.
- R Systems, backed by Blackstone, agreed to acquire NovigoSolutions, a Mangalore, India-based IT solutions company, for INR 400 crore ($45.8 million).
- American Industrial Partners agreed to acquire the Global Cellulose Fibers division of International Paper, a Memphis, Tenn.-based paper and packaging company, for $1.5 billion.
- Centerfield, backed by Platinum Equity, acquired ConsumerVoice, a Washington, D.C.-based digital commerce platform. Financial terms were not disclosed.
