For years, defense technology was viewed by many investors as a difficult market to back: capital-intensive, slow-moving, dominated by legacy contractors and tied closely to government procurement cycles.

Then came Anduril Industries.

The defense technology company has become a symbol of how some of the biggest investment opportunities emerge before the market is ready to recognize them.

According to a report from Commonfund, Anduril represents a classic example of a category-defining company that started as a non-consensus bet — one that looked unattractive to mainstream investors before proving that a new model could be built.

"Almost every category-defining company was non-consensus at one point in its journey," the report wrote.

The firm pointed to Anduril as evidence that investors can miss transformative opportunities when they rely too heavily on existing market assumptions. Before the company demonstrated that a large, valuable defense technology business could be created, the sector was widely considered "uninvestable" by many investors.

That perception began to change as Anduril built a new approach to defense contracting, combining artificial intelligence, autonomous systems and software-driven platforms to compete against traditional defense giants.

Anduril: Getting in Early

Founded in 2017 by Palmer Luckey, the company has grown into one of the most valuable private defense companies in the world.

Its rise has fueled a broader shift in venture capital, with investors increasingly looking toward defense technology as a major opportunity amid rising geopolitical tensions and demand for next-generation military capabilities.

But Commonfund’s broader argument is not simply that investors should have bought Anduril early. Instead, the firm says the company highlights a recurring pattern in venture investing: the greatest returns often come from backing companies before they become obvious winners.

"Once consensus forms, the price reflects it, and most of the return has gone to whoever was early," the report stated.

Commonfund compared Anduril’s rise to the artificial intelligence boom, noting that large language models were once dismissed as future commodities before companies such as OpenAI and Anthropic became two of the most valuable private companies in the world.

The lesson for investors, according to Commonfund, is that category-defining companies often emerge in areas where skepticism is highest. Markets tend to underestimate companies that challenge existing assumptions — until those companies prove the skeptics wrong.

For investors, the challenge is identifying those opportunities before the market catches up.

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