Google Owns a $1 Billion Unicorn Defense Company Now

"Don't be evil." That was the motto Google adopted for itself back when it went public in 2004.

Within 14 years, this motto had evolved into "don't work with the U.S. military" (unofficially, one imagines), when Google parent Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) very publicly pulled out of a Pentagon contract called Project Maven that would have used its artificial intelligence (AI) capabilities for military purposes.

Fast-forward just a few more years, and while one hopes Google is still avoiding actual evildoing, it's willing to compromise on the military part.

Image source: Getty Images.

Introducing Project Aalyria

For more than a decade, Google has been developing new technology to improve the interoperability of satellite and other communications systems. Utilizing what it calls Tightbeam lasers rather than radio spectrum, the technology has clear military implications -- and at least one multimillion-dollar Pentagon contract.

In 2023, the Office of Naval Research and Naval Research Laboratory awarded the Google spinoff Aalyria $7 million "to develop a first-of-its-kind capability to enable ultra-fast, hyper-secure, over-the-horizon connectivity across the Navy's sea, air, and land assets." As the company explained at the time: "Tightbeam ... can establish connections among static or in-motion objects in seconds. Its low probability of intercept profile enables ultra-secure communications that are highly resistant to disruption."

You can envision Tightbeam giving satellites the ability to communicate with fighter jets in hostile territory full of radio-frequency jamming, for example, controlling drones in flight, and guiding missiles to their targets. It's basically Aalyria's solution to the problem of dealing with modern electronic warfare.

Aalyria spins off

Google spun off Aalyria as a separate business in 2022, while retaining a minority stake of unknown size. Last week, Aalyria announced it has raised $100 million in new funding from private investors, including private equity firms Battery Ventures and J2 Ventures, and venture capital company DYNE Maritime.

According to CNBC, the funding round valued all of Aalyria at $1.3 billion -- instantly making Aalyria a unicorn company -- still privately owned, but valued over $1 billion.

CEO Chris Taylor explained the decision to raise funds now, telling online publication Tectonic Defense the company has amassed "an enormous amount of backlog." To turn that backlog into products that can be sold to create revenue, Taylor said, Aalyria needs "resources, people, and time." The cash Aalyria just raised will allow it to do that.

What's next for Aalyria?

With money in hand, Aalyria will be able to further develop its other product: Spacetime.

"This technology is capable of orchestrating and managing networks of ground stations, aircraft, satellites, ships, urban meshes, and more," says Aalyria, allocating spectrum and routing traffic so that everything can talk to everything else. In an interview with Tectonic Defense last week, Taylor described Spacetime as "digital cartilage that connects everything."

It's essentially software that helps communications networks, built by different companies and never designed to communicate with each other, so that they can communicate with each other.

Aalyria has won contracts from Leidos and the Pentagon's Defense Innovation Unit to integrate Spacetime into defense networks, but the technology also has clear civilian and commercial applications.

If Aalyria ever gets around to going public, it'll be not just a defense stock, but a space stock and a telecommunications stock as well.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.