Anorak Ventures closes $35M Fund III focused on deep tech and American dynamism

Anorak Ventures closes $35M Fund III

Greg Castle, managing partner of Anorak Ventures, has closed the firm's third fund at $35 million, continuing a deliberate strategy of keeping fund sizes small. Anorak has been investing in early-stage deep tech since 2017, with a focus on defense, aerospace, and industrial supply chain — what Castle describes broadly as American dynamism.

Staying small on purpose

Castle is explicit that the decision not to scale AUM is strategic, not circumstantial. He argues that every fund size requires a different skill set, and his edge has been deploying smaller checks flexibly, without sharp elbows, in a way that fits into rounds. The fee incentive to grow — stacking management fees on larger vehicles — is something he says he can afford to ignore given prior returns.

The LP base has consolidated alongside the fund strategy: Fund I had roughly 60 LPs, Fund II around 50, and Fund III has come down to 22. The mix has shifted from high-net-worth individuals toward family offices and funds of funds. Castle says he deliberately avoids sovereign wealth and large endowment capital — particularly from the Middle East — given Anorak's increasing focus on defense and American industrial policy. The firm's first international LP, Luxembourg-based Mangrove, joined Fund III.

“I am very much of the opinion that every size of fund requires a very different skill set and a very different strategy. What I proved out and what I'm good at is deploying smaller amounts of capital. I'm a lot more interested in some really freaking boring areas — in chemical production, in steel production, rare earths, magnets, all the boring stuff up the supply chain that we will need in order to achieve our mission as a nation.”

From Oculus to Anduril

Castle's origin in venture runs through two early bets. He operated a retail chain in the UK from roughly 2004 to 2010, then returned to the US to work alongside Brendan Erieb, Mike Antinoff, and Nate Mitchell at a software company that was later acquired by Autodesk. That network led to an early investment in Oculus, which Castle identifies as the moment that launched his venture career — and, he jokes, briefly convinced him the job would always be that easy.

The Anduril investment came through his relationship with Palmer Luckey and ignited, as he puts it, a patriotism he didn't know he had. That shaped the firm's subsequent direction toward defense and aerospace.

Rotating away from pure defense

Castle is now less focused on direct defense bets and more interested in what he calls the boring second-order layer: chemical production, steel, rare earths, magnets. Portfolio companies Nox Metals and Atlas Motion represent that thesis. The firm is also closing an investment in a kinetics company. The logic is that defense market valuations have risen sharply as capital has piled in, making 100x return profiles harder to underwrite. The government's stated desire to diversify its supplier base supports the thesis that there is room for multiple winners, but Castle is more comfortable finding those winners before the crowd does.

He is skeptical of pure biotech but sees bio-defense as adjacent territory worth watching — citing SoluGen as an example of the kind of company that fits Anorak's remit.

Defense prime inertia

On the question of why large primes like Lockheed haven't been more acquisitive, Castle says he's as surprised as anyone. His best read is that they may be waiting for a downturn to sweep up distressed assets at lower prices. The more pointed observation is that an Anduril IPO may be the event that finally forces prime boards to confront the valuation gap between their own companies and the new generation of defense tech firms.

Building the firm, not just the fund

At two people — Castle plus a San Francisco-based partner, supported by an assistant — Anorak is intentionally lean. Castle describes Fund III as a transition from fund manager to firm manager: building infrastructure, succession, and scale that outlasts him. AI tools are part of that plan. He says access to AI has made it meaningfully faster to build initial conviction on pitches in unfamiliar technical domains, comparing it to having a desk of analysts on demand, though he notes the firm needs to be using it more.

The firm operates out of Los Angeles, a move Castle made reluctantly before COVID. He now sees LA's talent pool, anchored by SpaceX and the broader El Segundo cluster, as a genuine and growing advantage for the sectors he backs.