Shield AI is raising $165 million at a $2.3 billion valuation to develop its military autonomous flying systems.

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Technologies built with a defense in mind are now gaining significant and serious popularity, fueled by world events, advances in technology, and growing end-user interest in investing in more innovative ways to protect themselves. In the latest 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 equity and $75 million in debt.

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The funding is estimated at $2.3 billion, according to Shield AI. The company has done well on this front: it’s following $210-$300 million. Serie D about ten months ago this valued the company at $1.25 billion. (He never confirmed the final amount, which was also a mixture of equity and debt.)

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Doug Filippone of Snowpoint Ventures led the round with Riot Ventures, Disruptive (recurring sponsor; Shield AISeries D) and Homebrew (this resulted in Shield AIseed round). The company’s other investors include Point72, Andreessen Horowitz, Breyer Capital and SVB Capital.

Filippone is interested in leading this latest round: in addition to being an investor, he is also heading Palantir’s global defense, a position he has held for the past 14 years. This is important, not least because Palantir may have been one of the key companies that changed the game in how startups inspired by the Silicon Valley tech boom began to win defense contracts and receive huge sums from venture capitalists to stimulate this growth. .

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Another influential startup that is changing the approach to defense technology financing is Anduril. which, as we reported just last week, raises up to $1.2 billion (potentially more) at a $7 billion valuation. This round, as we have heard, is basically already closed.

Shield AI is based in San Diego, which can be said to be a bit like the Silicon Valley of the defense industry. It is the home port of the US Pacific Fleet. statistics collected Outside of Fairfax County, Virginia (where the Pentagon is based), San Diego receives more defense spending than any other place in the US, according to the city’s Chamber of Commerce. Shield is based there among dozens of other defense contractors large and small.

And if you do not follow the defense industry, but at least see or hear Best shooter or its recently released blockbuster sequel, you know it’s a major aerospace development hub. Shield AI is targeting a very specific customer base that is centered around the US military and its alliesbut even so, he talks about what he does in terms that put his purpose and function into context for more ordinary people.

“China’s military is Netflix; US military – Blockbuster. China is the Amazon; USA is Barnes & Noble. China is Tesla; USA is General Motors. writes Brandon Tseng, president of the company who founded it with his brother Ryan (who is the CEO). Brandon is also a former Navy SEAL, so he speaks with some authority when drawing these kinds of analogies.

And on the company’s homepage, he describes Hivemind, his AI-powered standalone software platform, like what else? “The best shooter for every aircraft.”

Like many other companies (maybe all companies) in the field of autonomous transport, whether in the air or on the ground, Shield AI has a combination of software and hardware that can already be used, and then products that are still in development. Some will be used in purely standalone systems and some in tandem with humans.

In the case of Shield AI, the company says 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 that the specifics of where and how are classified like most other companies, but they are part of the US Department of Defense program.

The company is also working on a vertical takeoff and landing (VTOL) aircraft called the V-BAT, which will soon be powered by the Hivemind. The software is also being integrated into other aircraft, such as the F-16 fighter pictured above, where it will act as co-pilot alongside a human, with the aim of using it on F-22s, F-18s and other models as well. Meanwhile, Tseng said in an interview that his V-BAT ships have also been operating since 2018 around the world.

“The Department of Defense and the international military are rapidly acquiring V-BAT, so we are ramping up production as quickly as possible,” he said, one reason for the funding. He added that V-BAT beat 13 competitors to win the Navy’s largest record program. Its advantage lies in the ability to withstand difficult conditions. “The unique design and controls allow it to take off and land in high winds, on crowded crew decks, aboard moving vessels with a landing area of ​​just 12 feet by 12 feet.”

The larger strategy is to create “aggregation” capability for your devices—essentially, use several of them together to avoid jamming technologies from adversaries. This should hit the market by the end of 2023, according to Tseng (although since much of what they do is classified, they might not release anything until after it’s been used).

With both the recent landmark Anduril round and this latest Shield AI round, we are now at a point where VCs operating in difficult financial conditions have changed their tune when it comes to backing defense companies, including not only are companies like these creating military technology, but also those involved in cybersecurity and other types of technology that help build resilience. Interestingly, these can be alternative energy technologies and, of course, products that can be used not only by governments, but also by enterprises.

“The fundraising climate has never been more favorable for defense technology companies,” Tseng told TechCrunch. “Defense support has been taboo in many circles. Many early investors turned us down because the defense was considered too controversial. Today, there is growing recognition that investment in defense contributes to the security, stability and peace that are the foundation of a prosperous society.”

As noted by others who are investing in or building for this space right now, there has indeed been a noticeable shift in how people feel about companies like Shield AI and what they are trying to develop. However, this is still a problem and may be one of the reasons a company like Shield puts in the work of sending messages to people who may never be customers to keep them accepting what they try. do.

“Many people don’t realize the scale of conflict in the world – before Ukraine, 84 million people were displaced as a result of violence and persecution, compared to 39 million in 2011,” Tseng said. “There are not many opportunities to contribute to technologies that meaningfully solve humanity’s great problems or create the general conditions for human achievement. 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 empowering our country and allies to enhance security, stability and peace.”

This is also facilitated by the fact that opponents are also rushing on the heels, building their own similar systems. China aims to achieve military parity in the Pacific by 2027, Tseng said, meaning they aim to surpass the US by 2028. He added that there have been reports that he is already comparing his prototypes to the Shield AI pilot.

Tseng can also be biased, but he has a very different idea of ​​why autonomy matters more in this context. “Waymo engineers are building minivans that race through the suburbs at 25 miles per hour, we are working on autonomous fighter jets that fly at over 1,000 miles per hour, evade missiles and detect threats,” he said.

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

“Investors are looking for quality. This round is a reflection Shield AIsuccess in building great products, building a business on solid foundations and dominating technology leadership – with AI the pilot has proven himself to be the best in the world by numerous military assessments,” Filippone said in a statement. “We like what they use AI and a software framework for various aircraft to provide our fighters with truly revolutionary value. The work they do today is just the tip of the iceberg.”

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