Closing Bell - Manifest Space: Epirus’s $250 Million Funding Round & Drone Disruption with Epirus CEO Andy Lowery 3/18/25

Episode Date: March 18, 2025

Investors continue to be excited by defense and national security tech. The latest case: Epirus, a weapons maker that specializes in electronic warfare that disrupts drones. CEO Andy Lowery joins Morgan Brennan to discuss the company's recent $250 million funding round and plans to scale production and the need for rapid innovation in defense.

Investors continue to be excited about national security related tech. The latest example, EPROS, a maker of weapons to combat drones. The company just raised $250 million in an oversubscribed Series D funding round. CEO Andy Lowry says that money will go toward production. A lot of us are coming up and are new as companies. And so to get to the sort of volumes and the scalability that you need to get to to support the war fighters across the world, that's the next phase of a company.

So we've raised money in order to ensure that we have enough volume manufacturing across the country and we're looking at various regions of the country, like Oklahoma and other places that we can add some factory capacity and some other things. EPROS specializes in electronic warfare, creating high-powered microwave force fields that can zap swarms of drones out of the sky. The startup is already working with the US Army,

and like others, is positioning itself for a role in the Golden Dome Homeland Missile Defense Shield that President Trump has ordered the Pentagon to begin developing. Golden Dome is expected to take tens of billions of dollars to create. Quite frankly, this is a very excellent technology for space.

And when we're looking at Golden Dome, even in outer space and looking at all the satellites and how they move around, in the case if we were to go to a war, those satellites, how they position now will just move. And because of that, you know, we're not quite sure where to apply sort of our defensive thinking.

And a lot of people say whoever wins the space war in the next war is gonna win the war. On this episode, Epirus' CEO discusses drones and what it takes to protect against them, the so-called Neo Prime model, and the intersection of geopolitics and critical minerals. I'm Morgan Brennan, and this is Manifest Space. So there's a lot to talk about, but first I think let's start with the news of the week,

which is the fact that you just closed another funding round. Talk to me about it and what this enables. Yeah, we're really excited because we had just an abundance of interest. And in fact, in a rare case, I actually had a few investors that really didn't make it to the round. So we're well over subscribed. We raised $250 million and maintained our unicorn status throughout it.

But this is where we really need to get serious about scale. We've proven sort of a market fit over the last year and a half working with the Army. They're basically our flagship launch customer, if you will, but now that the world is starting to build in sort of further and further sort of crescendo of activity around counter drones and critical asset protection. The world's in need of something that can defend our bases and our critical assets in kind of a one to many or sector defense way. And now, so it's time to scale.

And that's a lot of this Neo-Primes. A lot of us are coming up and are new as companies. And so to get to the sort of volumes and the scalability that you need to get to, to support the war fighters across the world, that's the next phase of a company. So we've raised money in order to ensure that we have enough volume manufacturing

across the country. And we're looking at various regions of the country like Oklahoma and other places that we can add some factory capacity and some other things. So it's very exciting that we're in kind of the final scalability phase of the company and the entrepreneurial journey. And we're real proud and happy with our investors that came on board. Both our insider investors and

about 50 percent are new investors. There's so much you just said there that I want to dig into, but I guess first just sticking with the raise itself. We've had a number of companies, EPROS being one of them, that have raised capital in the private markets in the last couple of weeks, and it does to your point. I feel like the conversation I'm having with everybody is that they're oversubscribed. And I do wonder if you feel like we've sort of hit a tipping point in terms of investors realizing, grasping,

and getting excited and passionate about what this sector has to offer at this key moment in time. what this sector has to offer at this key moment in time? Yeah, I think I call the kind of the new defense contractors Neo primes and you know, maybe the godfather to us all was Palantir back in 2005 when they got started focused on AI and software and then SpaceX, Andrel, kind of a legacy of success. And what I think the government has now come to a complete and utter conclusion of is that

we're in sort of a new phase of warfare. And I'll call it kind of advanced machine dominated guerrilla warfare, where if you look what's happening in Ukraine and Israel, the rapidness that you need to design and field the systems today because the enemy is doing the same, is a much much quicker pace than we've traditionally been able to support with using the infrastructure that we've had with the traditional times, like my old alma mater Raytheon. So what's coming up now is a need for companies like EPRS and in each lane we kind of have a speciality. EPRS is a specialist in electronic warfare, but we're also a specialist in going very, very fast and behaving more

like a product company than a traditional services company. And because of that, we're able to anticipate the needs of the warfighter and kind of work arm in arm, hand in hand with some of the most senior people in the Department of Defense in order to fulfill their needs. And so investors see that, that's very apparent that there's going to be a need, a bigger section of our defense budget that's dedicated to kind of defending in this rapid advancing guerrilla warfare type of fighting that's going on around the world. And EPROS is luckily one of those companies that's in that lane and very front and center in that lane. So I think the interest in our investors was very

reflective of both of those dynamics, the dynamic of Neo-Primes coming to market and then the dynamic that EPROS is a very important element when it comes to sector defense and one to many defense and critical asset defense. What does that mean to be more focused, to be more of a product focused company than focused on services? I mean, that sounds like a business model shift versus what we've maybe thought about

when it comes to defense historically. It very much is. And so traditionally, aerospace and defense companies like Lockheed Martin and Boeing and Raytheon, they perform their services like a law firm almost. If you go to a law firm, the first thing they ask you is get a charge number. When you go to a Raytheon, the first day in the door, they say, where's your charge number? So they're orientated towards being kind of a services

company for the DOD or an extension of the DOD department. But like the DOD department, that's become very focused on safety and security, which produces a lot of bureaucracy, the primes have a lot of bureaucracy. And they're able to deliver very advanced, very dangerous warfare systems safely and securely. But that tends to drive speed down. That tends to slow you down because you're thinking

and you're modeling and such. Whereas in a product company, what you do is you kind of get out ahead of the need. You survey what you see going on in the world. You survey a wide variety of customers, and then you use your own dollars to invent and to create. And then you bring the invention or creation kind of right, hopefully at the right exact time to the market.

And then the market quickly adopts the system that you've designed because you don't have that period of time that you're going through design and iteration and design and working directly with the customer. You come in and sort of a later phase of the product's evolution. And by doing that, you'll look at sort of an income statement or something,

and you'll see a large delta between our gross profit line and our income line. You'll see net income and gross profit have a lot of separation. That's indicative of us reinvesting into our own research and development and our own IP. So we are a heavy-duty intellectual property focused company where a lot of the stuff we're creating, even though it's weapon systems and such, are commercially derived.

And so that's a big shift and a big difference. And I can say, Andrel kind of has that same motion of to go to market as more of a product company as well. And so that's gonna be, I think, a new phase of how a lot of defense contractors are going to start to emerge and become successful. Because yet again, like I said before, this is guerrilla warfare days and America hasn't traditionally done great in guerrilla war, except for maybe our first one.

No, it's such a key point. And I find myself even having these types of conversations with, you know, executives of the more traditional, if you will, or legacy, I don't like that word, but legacy, you know, defense contractors, because it does seem the world is going this way. So when you talk about reinvesting into R&D and you talk about IP, what is the technology? What is the capability of EPROS? And how is that evolving? And how quickly does it evolve? does it evolve? Well, EPIRUS focuses on defending critical assets and we do so by applying kind of a new method of delivering directed energy or high-powered microwaves. What that means, in very simple speak, is we've created a force field of sorts. So what this does is it basically scans the air with a lot of

electromagnetic energy. So it places a lot of electromagnetic energy in the sky. And because our system is uniquely designed with the substance called gallium nitride, which is a solid state is a solid state amplifier, we can create huge and vast amount of energy. And energy is just power times time. So that energy is persistent in the atmosphere. And what it does is creates a noise environment so that electronics just don't work. And it doesn't need to go in like a jammer or anything like that. It can be like you've seen some maybe Ukraine videos where they have a fiber optic control drone. Doesn't matter. Our system basically goes right into the circuit boards because of the high, high powers we deliver the force field at.

And then once in those circuit boards, the energy makes a mess of things and really doesn't allow the system to think or operate. And so when it can't think and operate, it stops functioning. And that's when the drone, for example, will fall out of the sky. But drones is just one thing that we affect. We affect boat motors and car motors and computers and anything with electronics in it. So it's got the uniqueness that it's sort of one of the only systems out there that we can really scratch our head and say, I don't care if there's a hundred

drones or a thousand drones or a million drones. I'm going to put this energy in this sector of the sky between zero, zero, zero and zero, four, five out to one kilometer or two kilometers or whatever the requirements actually dictate us to have to perform at. And everything in that sector of the sky, if it's a thousand drones, will all fall. And that's basically become a key component on how we'll do our layered defense both outside of America overseas and then inside of America with things like the Golden Dome project that's starting to emerge will be a key non-kinetic component of that to stop drones at the border, to stop drones going over Langley or New Jersey.

It's finally time to let these drones that are a little like Icarus with his wax wings, it's time to do some melting and our force field will be doing the melting. I'm literally this was my question for you because I'm sitting here talking to you from New Jersey and obviously the drone situation has been a big one here. I mean, I can't tell you how many people I work with and sit near in this building who have had their own drone experiences here in recent months. And so what's been fascinating to me about that whole dynamic is how much it has shed a light on the fact that when it comes to something like drones, and particularly from a homeland

security standpoint, we're very vulnerable to anything like that. So how, so are you seeing your systems being deployed here and how quickly can you make that happen, especially when we're talking about scaling production? Oh, yes ma'am. Now what we've done is we have deployed four systems with the Army. Two, General George told Congress where they were headed. It's somewhere in the Middle East so I can say that and they're being operated today. And then two, I'm not allowed to say where they're going but another two are going to go out somewhere to do some other protecting of a critical asset or a base. And so those are early prototypes, our first generation. The second generation, which we're building four systems for the Army now again, is coming out later this summer.

And those systems will be fully mission capable prototypes, meaning that if they're ready to scale and I think the world is, we're ready to scale with them. Right here in California, we can produce between 20 and 30 systems a year, if that's the demand signal. So when I'm talking about scaling, I'm really talking about the next click up, like going to maybe 100 or more systems per year, which is the buying signs and the indication of that's going to be kind of the critical level of need. These systems will probably be employed at the border. They'll be employed at domestic places because the fracture side or the sort of the consequences of using our system beyond stopping these drones at the fence line

is quite minimal. It really has no real sort of secondary effects on other people in the neighborhood near where we're gonna wanna down some of these things or any of that. It doesn't really do anything worse than a high powered radar transmitter that you'll see at airports or whatever. So there's

there's not a lot of risk so it presents a really unique solution. I mean for viewers that are a little confused about the technology just think of it as like a force field, a short range, a sector of the sky, put a lot of electromagnetic energy in the sky so that anything that flies into it or impinges upon it will cease to operate and then we can go gather up where those drones are coming from and see who's trying to fly over our F-35s or cause harm or damage. It's funny you should say that, I was at the Reagan just last December, Reagan Library in LA, and in the middle of that huge event, we had a large drone, it looked like a man drone, a size of a small car, just surveying the entire event with two or three small quadcopter drones around it. And no one knows where that drone came from or where it went.

And that's a big problem right now domestically that I think this administration has the fire in their belly to get rid of it, to get rid of that problem domestically so that we're not kind of imbalanced with some of the sort of incursions that we're getting and very sensitive in places where we just don't want sort of even hobbyist drones to be flying.

Yeah, I was at that event too, the Reagan National Defense Forum, and it was like, you know, hair raising a little bit, especially when, you know, I spoke to some Defense Department officials and they didn't seem to have answers, or at least answers that they were publicly going to share either, to your point. Are there commercial applications as well? Are you thinking about this as a dual use technology, or is this purely for government?

Well, the system itself, being a directed energy system, is considered a category 18 ITAR weapon system. It's on that list, even though it performs its mission more like a high energy microwave system. And there's applications like sensing and radar applications that it's a software defined system so that it can be used in kind of multiple lanes and depending on how it's used it may have a commerciality motion but in general the system is you know sort of a

sort of a very significant system a pretty kind of exquisite system that can do lots of protection in lots of different areas so when we think about a commercial application, what we're really thinking about is, let's say stadium protection or Olympics protection, something that would most likely be operated and the charter for that would maybe be Homeland Security or Customs and Border Patrol and those types of agencies. But beyond that, as far as like a very rich person buying one for their mansion or something,

I think in the near term, that will be a difficult sale to have. I don't think the military will allow just a commercial use of the system in the near term. So we're more locked into sort of the government channels, albeit not just the DOD lane. That lane is very broad because of the need to, like you said earlier, protect critical infrastructure. And we're very well in America. There is a popular, excuse me, I think, I forget which magazine ran it, but just recently there was an article in one of the big journals that talked about how fragile sort of our power grid is and a lot of our infrastructure. There's not a lot of defense networks around that doing much kind of protecting of those things.

And so in the case of being able to do this guerrilla warfare kind of right underneath the umbrella of our defensive systems inside the country, you know, bad actors can get into the country, buy hobbyist drones and do a lot of damage with those, we need to get better at protecting our infrastructure. And I think Golden Dome understands that, and I think this administration understands that that's going to be a big part of kind of this administration's

initiatives is to try to look at that fragile infrastructure and make sure that we have appropriate defenses in case we end up getting into some skirmish or just have sort of the new version of terrorists inside the country trying to do bad things to good nice ordinary people and folks. What are your expectations for Golden Dome? Well we're you know we're hopeful that that you know that we'll be sort of dead center of it. I mean, that's at least kind of some of the discussions. The system itself has legs to get into any kind of space. Like we've started on kind of a ground defense system, but we've been working preliminarily at some of the airborne applications for our system and how they can scale to kind of that space. And then quite frankly, this is a very excellent technology for space. And when we're looking at Golden Dome, even in outer space,

and looking at all the satellites and how they move around, in the case if we were to go to a war, those satellites, how they position now will just move. And because of that, you know, we're not quite sure where to apply sort of our defensive thinking. And a lot of people say whoever wins the space war in the next war is gonna win the war. And so we need to be up in space as well. And that's very early stage talks. We haven't done much in way of that at EPROS,

but every single sort of domain could stand to use some force fields, I guess. You know, I keep going back to that. It's a heck of a platform that can basically apply either electronic attack applications where we can cease equipment from working or electronic defense where we're defending basically one of our assets or critical homeland types of infrastructures in a way against enemy attacks. So I just have one final question for you and that is can you get all of the materials and all of the supplies you need to build out the systems at the rate that you anticipate in terms of future demand signals. I realize on the drone side specifically, for example,

with all the tariff trade war stuff that's unfolding right now, we've seen China add more companies to their so-called entities list and slap more export controls in place. But we've also had these conversations in general about critical minerals and rare earths and just, I think it all casts a light on supply chains

and what it's going to take and continue to take to build and reinforce domestic supply chains and the industrial base. I just wanna get your thoughts on that. Oh, you couldn't be more right. You hit a nail dead on the head with what's happening in America. And even if you look, recent news

talks about Andrel opening a Columbus, Ohio rocket engine factory, because they were limited. They looked far and wide across the country before they made that investment. And they just couldn't find anywhere that could produce the volumes that They looked far and wide across the country before they made that investment, and they just couldn't find anywhere that could produce the volumes that we're looking at going overseas in China and Iran and Russia. The volumes that they're producing, some of this new type of drone warfare and other types

of systems, just totally outpaces what we're capable of in the US. I mean we just don't have that infrastructure. So when you look at a drone, at a directed energy high energy system like us, if you double click once you're having the high powered amplifiers that are behind all these high powered amplifiers that are behind the antenna. that are behind all these high powered amplifiers that are behind the antenna. If we get an order of 100 systems that would equate to something along the lines of 30,000 high powered amplifiers and we haven't delivered this high of a powered amplifier with this high of a quality and this volume since maybe the early cellular base station expansion days in the early 2000s. So when I look far and wide across America,

even companies that are well suited to build something like this will need to greatly expand their capacity and their quality. So now that's if we get into 100 and above with the volume that we can deliver 20 to 30 today, we've made darn sure that our supply chain can support that. So we're ready to go with our given infrastructure or our factory here, but then going on into the future, we're going to have to take a look at system integration at

maybe 100 system plus a year type volume, plus that one double click, which is those gallium nitride amplifiers. And one last point, you did mention rare earth minerals and gallium is one of those. And China exports most of the world's gallium. Now our particular supplier just happens to source most of their gallium through recycled methods. And Japan is their primary supplier on gallium. So with our system and our particular devices,

we feel that, oh, gallium will be fine, will be okay. And what it's also triggering is a lot of aluminum miners and everything else to get into the gallium business. So he's creating sort of domestic markets and other global markets by some of the tactics he's applying. And so when he does want to open up Gallium again, if he ever does, I don't think there's going to be as big of a market for it

as people are starting to kind of fill the gaps where the trade war creating gaps. It's going to be one to watch. One of many things to watch. Andy Lowry, the CEO of EPRS, thank you so much for the time and the insights today. I appreciate it. Well, thank you very much for having me. I really enjoyed it.

That does it for this episode of Manifest Space. Make sure you never miss a launch by following us wherever you get your podcasts and by watching our coverage on Closing Bell Overtime. I'm Morgan Brennan.