Shield AI boosts Series F by $300M, raising valuation to $2.8B

Tue Jan 2, 2024 - 3:06am GMT+0000

Shield AI, a burgeoning defense technology startup, has significantly expanded its Series F funding round by securing an additional $300 million through a mix of equity and debt, culminating in a total of $500 million, as exclusively reported by TechCrunch. This latest financial infusion includes $200 million in equity secured last November, alongside a new $100 million in equity raised at the Series F price and $200 million in debt facilitated by Hercules Capital. Notably, the company has chosen not to disclose the sources of the new equity. Following this round, Shield AI’s valuation has surged to $2.8 billion, marking an increase from $2.7 billion in November.

At the core of Shield AI’s innovation is the development of an “AI pilot,” aimed at transforming aircraft into autonomous systems. This flagship initiative, known as Hivemind, is designed to enable groups of aircraft to operate independently, without the need for remote human operators, communication links, or GPS navigation. Ryan Tseng, the CEO and co-founder of Shield AI, attributes these capabilities to recent advances in computing power and artificial intelligence. He emphasizes the strategic importance of AI pilots in the realm of conventional defense, likening their potential impact to that of aircraft carriers and guided missile submarines. Tseng’s vision is that these AI-driven systems represent a new kind of strategic deterrent, one that is defined by software and made feasible through contemporary technological advancements.

In the broader context of startup financing, venture debt is often viewed with skepticism. However, it is increasingly recognized as a viable financial tool, particularly for late-stage companies in need of capital to achieve critical milestones such as profitability or an eventual exit from the market. While sometimes associated with struggling early-stage startups, venture debt in the later stages of business development can be a strategic move to capitalize on growth opportunities.

Furthering its technological advancements, Shield AI, which operates out of San Diego, has recently launched a new software product called V-BAT Teams. This system works in tandem with Hivemind to enable teams of V-BAT drones to autonomously and cooperatively execute missions. This innovation reflects the company’s commitment to enhancing autonomous operational capabilities in defense technology.

In a testament to the perceived importance and potential of AI in national defense, Brandon Tseng, president and co-founder of Shield AI, recently provided testimony before the U.S. Senate. He stressed the critical role of AI-piloted systems in the country’s defense strategy, declaring them to be a paramount military deterrent for the current generation. However, he also acknowledged the challenges and complexities involved in integrating these advanced AI systems into the Department of Defense’s force structure, describing the process as “difficult and murky.” This duality underscores both the promise and the challenges inherent in the cutting-edge field of AI-driven defense technology.