Shield AI Raises $165 Million on a $2.3 Billion Valuation to Drive Development of Its Military Autonomous Flight Systems – TechCrunch

Technology built with defense in mind is getting significant and serious traction right now, spurred on by world events, advances in technology and a growing appetite from end users to invest in more innovative ways to protect themselves. In the most recent development, Shield AI — which makes software and hardware for drones and other autonomous aircraft used by the military and other government organizations — has raised $165 million in funding, $90 million in Series E shares and $75 million. in debt.

Funding is approaching a valuation of $2.3 billion, Shield AI said. The company is at a strong pace on that front: It has been following a $210-$300 million Series D for about ten months, which valued the company at $1.25 billion. (Never confirmed the final figure, which was also a mix of equity and debt.)

Snowpoint Ventures’ Doug Philippone led the round, with Riot Ventures, Disruptive (a returning sponsor; led Shield AI‘s Series D) and Homebrew (led Shield AIseed round). The company’s other investors include Point72, Andreessen Horowitz, Breyer Capital and SVB Capital.

Philippone is an interesting person to lead in this latest round: in addition to being an investor, he is also global defense leader at Palantir, a position he has held for 14 years. This is important because Palantir was arguably one of the leading companies to change the game of how startups, spurred on by Silicon Valley’s tech boom, got involved and started winning defense contracts and raising huge sums of VCs to fuel this growth. .

Another influential startup that is changing the conversation around defense technology funding is Anduril, which, as we reported the other week, is raising up to $1.2 billion (potentially more) at a valuation of $7 billion. This round, we hear, is basically over.

Shield AI is based in San Diego, which you could say is a bit like the Silicon Valley of the defense industry. It is the home port of the U.S. Pacific Fleet, and according to statistics collected by the city’s chamber of commerce, outside of Fairfax County, Virginia (where the Pentagon is based), greater San Diego receives more defense spending than that anywhere else in the US shield is headquartered there among dozens of other major and minor defense contractors.

And if you don’t follow the defense industry, but at least you’ve seen or heard of top gun or its recently released blockbuster sequel, you’ll know it’s a major hub specifically for aerospace development. Shield AI targets a very specific customer base, focused on the US military and its allies, but still talks about what it does in terms of bringing its purpose and function into context for more everyday people.

“China’s military is Netflix; the US army is Blockbuster. China is the Amazon; the US is Barnes & Noble. China is Tesla; the US is General Motors,” writes Brandon Tseng, president of the company that co-founded it with his brother Ryan (who is the CEO). Brandon is also a former Navy SEAL, so he speaks with some authority when making this kind of analogy.

And on the company homepage, he describes Hivemind, its AI-based standalone software platform, as what else? “A Top Gun for every aircraft.”

As with many other companies (perhaps all companies) in autonomous transport, whether in the air or on the ground, Shield AI has a mix of software and hardware that is already usable and products that are still in development. Some will be used in purely autonomous systems and others in conjunction with humans.

In the case of Shield AI, the company says that Hivemind and its Nova drone (or small unmanned aircraft system, sUAS, in more formal terminology) have been in use since 2018. Ryan Tseng tells us the specifics of exactly where and how are classified, like most other business activities, but are part of the US Department of Defense Records Program.

It is also working on a vertical take-off and landing (VTOL) aircraft called the V-BAT that will soon be equipped with Hivemind. The software is also being integrated into other aircraft, such as the F-16 fighter pictured above, where it will act as a co-pilot alongside a human, with the aim of also being used on F-22s, F-18s, and other models. Meanwhile, Tseng said in an interview that his V-BAT spacecraft has also been operational since 2018 around the world.

“The DoD and international military are acquiring the V-BAT quickly, so we are ramping up production as quickly as possible,” he said — one of the reasons for this funding. V-BAT defeated 13 competitors to win a major Navy Registration Program, he added. Its selling point is its ability to withstand challenging conditions. “The unique design and controls allow you to take off and land in high winds, on crowded flight decks, aboard moving vessels with landing zones as small as 12′ x 12′.”

The bigger strategy is to build a “swarm” capability for your devices – essentially to use several of them together as a way to avoid interfering technologies from adversaries. This, Tseng said, is on track to hit the market by the end of 2023 (although since so much of what they do is classified, they may not make anything public until it’s already in use).

Taking Anduril’s recent landmark round and this latest Shield AI round, we are at a time when VCs – working in a challenging financial climate – have changed their tune when it comes to supporting companies in the defense space, which includes not only like those that build military technology, but also those that work on cybersecurity and other types of technology that help with resilience. This could, interestingly, include alternative energy technology and, of course, products that can be used by more than just governments, but businesses as well.

“The fundraising climate has never been more favorable for defense technology companies,” Tseng told TechCrunch. “Supporting the defense was taboo in many circles. We were rejected by many early investors because the defense was considered too controversial. Today, there is a growing recognition that investment in defense contributes to security, stability and peace, which are fundamental to a thriving society.”

As noted by others who are investing in this space now, or building for it, there really has been a noticeable shift in how people view companies like Shield AI and what they are trying to develop. That’s still a challenge, however, which could be one of the reasons a company like Shield goes through the trouble of messaging people who may never be customers to even understand what they’re trying to do.

“Many people don’t realize the extent of conflict in the world – before Ukraine, 84 million people were displaced by violence and persecution, up from 39 million in 2011,” Tseng said. “There are not many opportunities to contribute technologies that meaningfully address humanity’s great challenges – or that create the general conditions for human fulfilment. When you work on AI pilots for defense – you are working on the most important and disruptive defense technology of the next thirty years – and you are empowering our country and allies to promote security, stability and peace.”

This is also complemented by the fact that adversaries are also on the hunt to build their own similar systems. China aims for military parity by 2027 in the Pacific, Tseng pointed out, meaning it aims to overtake the US by 2028. He added that there are reports that it is already comparing its prototypes with the Shield AI pilot.

Tseng can also be biased, but he has a very different idea of ​​why autonomy is more important in this context. “Waymo engineers build minivans that travel through the suburbs at 40 km/h, we work on autonomous fighter jets that fly at 1,000 km/h, dodge missiles and find threats,” he said.

All of this means not just an opportunity in a commercial sense, but also a broader opportunity for those who support Shield AI.

“Investors are migrating to quality. This round is a reflection Shield AIthe company’s success in creating great products, building a business with solid foundations and dominant technology leadership – with a AI pilot has proven to be the best in the world in numerous military assessments,” Philippone said in a statement. “We love that they are leveraging a AI and software backbone on a variety of aircraft to deliver truly revolutionary value to our warfighters. The work they are doing today is just the tip of the iceberg.”

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