Two California drone startups just landed the Pentagon's biggest small-drone orders

The Pentagon's $1 billion Drone Dominance program launched in December 2025 with a procurement mechanic that turns test rankings directly into production orders. Two California startups founded by competitive drone racers in 2023 are now absorbing the largest volumes: 14,000 Archer AI airframes to Neros and 8,000 drones to Perennial Autonomy, both confirmed in the program's Gauntlet II results released this week.

The combined 22,000-drone order is the program's largest volume to date. Neros's September 30 announcement pegs the Gauntlet II award at over $100 million, including explosive payloads. Perennial's 8,000 units are part of the same competition round.

Rankings drive orders. That is the procurement mechanic. Drone Dominance runs a series of "Gauntlet" test events in which teams fly their airframes against defined mission profiles. Final rankings translate into production orders at fixed per-unit prices. The result is a competition-based procurement lane that routes volume to whoever performs best in the test, not to the traditional prime contractors.

Neros came out ahead in the Gauntlet II confined-environment trials and placed third in deep-strike testing, while Perennial led the deep-strike category. Order sizes follow the rankings: Neros's broader showing across two categories produced the 14,000-unit order, while Perennial's single-category win earned the 8,000-unit order.

Both companies were founded in 2023 by engineers who came out of competitive drone racing. Racing drones are small, fast airframes flown through gates at high speed. The transition from racing-class hardware to military strike platforms took less than three years. Neros's winning airframe is the 10-inch Archer AI, which the company describes as carrying terminal guidance to an operator-selected target. Terminal guidance corrects the airframe's trajectory in the final phase of flight; operator-selected target means a human picks the aim point. Neros also produces a smaller 5-inch Archer variant. The two airframes are not interchangeable: the 10-inch is the deep-strike platform, the 5-inch fills a different role. The order includes both variants.

Neros has shipped earlier-round volumes. The publicly readable section of the program's vendor data file lists Neros at 87.5 points in Gauntlet I, with 2,400 drones ordered, shipped, and accepted, plus a separate bonus allocation. The company also received a second Gauntlet I bonus order for 800 drones reallocated from competitors who could not meet production deadlines; that explanation is Neros's account, not independently confirmed. The Gauntlet II results are reported by Defense News based on program data; the underlying scoring and test conditions have not been independently verified.

Perennial also holds a $500 million contract via the Joint Interagency Task Force 401 (JIATF-401, a multi-agency counter-drone and autonomous-systems organization) earlier this year. That direct contract is the kind the new competition is meant to complement, not replace. Neither volume of orders nor a leaderboard finish proves delivery at scale or combat effectiveness. The order values include payloads and multiple airframe variants, so a per-drone unit price cannot be derived by dividing the total by the unit count. Terminal guidance to an operator-selected target is not the same as autonomous target selection, and the contested-environment reliability figures Neros cites are vendor numbers, not independent field data.

Neros and Perennial now have to ship the volumes they just won. The program will measure that performance when Gauntlet III rankings land.