Stay up up to now with free updates
Simply log in Aerospace & Defense myFT Digest – delivered straight to your inbox.
Artificial intelligence startup Shield AI will nearly double its value to $5 billion in a brand new funding round as investors race to fund defense technology firms that produce cutting-edge military systems.
The San Diego-based group, which makes AI-powered software for autonomous aircraft and drones, is raising about $200 million from defense and aerospace firms including Palantir, Airbus and L3 Harris, in line with people near the deal stand close. Venture capitalists equivalent to Andreessen Horowitz, Point72 and Riot Ventures are also expected to participate, they added.
The fundraising will boost Shield's valuation from $2.8 billion a 12 months ago, as investor interest grows in firms more likely to profit from increased federal spending on national security under the brand new administration of Donald Trump .
Wars in Ukraine and the Middle East, in addition to geopolitical tensions between the U.S. and China, have also increased Washington's reliance on technology firms developing advanced AI products that will be used for military purposes.
Shield's core Hivemind software enables drones and aircraft to operate without GPS, communications or a human pilot. Its autonomous technology is utilized by a lot of competing firms, including long-established defense prime contractors that may integrate its software into their aircraft.
“Companies put money into competitors when there are strong strategic reasons to accomplish that,” said considered one of the people aware of the matter. The investments are an indication of “serious commitment to leveraging our autonomy backbone of their programs,” they added.
Shield declined to comment. Palantir, Airbus, L3 Harris, Andreessen Horowitz, Point72 and Riot Ventures didn’t immediately reply to requests for comment.
The fundraising comes at a time when technology firms are attempting to grab a bigger share of the US government's $850 billion defense budget from traditional prime contractors equivalent to Lockheed Martin, Raytheon and Boeing.
The Financial Times revealed last month that Palantir and Anduril, two of the most important U.S. defense technology firms, are in talks with a couple of dozen competitors to form a consortium that may bid together for defense contracts. Shield AI is amongst the businesses trying to join the consortium.
Groups like Palantir, SpaceX, Anduril and OpenAI have, in some cases, integrated systems to leverage their technology and advance America's military capabilities more quickly.
Pete Hegseth, Trump's chosen defense secretary, stressed Tuesday the necessity to speed up weapons development through competition and innovation.
During his Senate confirmation hearing, he praised Silicon Valley, saying that it “has demonstrated for the primary time in generations the willingness, desire and talent to bring its best technologies to the Pentagon.”
Investors have been quick to back Silicon Valley's emerging defense industry. Palantir's stock price has risen 330 percent previously 12 months and is price over $160 billion.
The data intelligence group was co-founded by technology investor Peter Thiel, who also provided initial backing for Anduril, which launched in 2017 and was valued at $14 billion last 12 months.
