Shield AI raises another $60M at a $2.3B valuation for its military autonomous flying tech

Defense technology continues receiving a lot attention from investors. Today, one of the larger startups in this space is announcing additional funding. Shield AI, which designs platforms and planes for autonomous flight systems and targets the U.S military and its allies, has raised $60 millions in funding. This money will be used to develop its technology.

The money is coming in as an extra part of Shield AI’s Series E and brings the total round up to $225million. Shield AI announced the previous $165 million tranche in June, which gave the startup a valuation of $2.3 billion. We have confirmed with Brandon Tseng (Shield AI’s president), that the extension was at the same valuation. He co-founded the company along with his brother, CEO Ryan Tseng.

This latest $60million was raised by a single investor, Thomas Tull, a Hollywood producer. (Previous investors in the company include Snowpoint Ventures, Riot Ventures, Disruptive, Homebrew, Point72 Ventures, Andreessen Horowitz, Breyer Capital and SVB Capital.) This round of additional funding was actually closed a week after it was announced.

We’re in a difficult period for fundraising: investors have tightened the purse strings in response to tech companies, from top down, experiencing a slowdown. Startups that find it difficult to raise funds have had to reduce costs and show their backers that their business ideas will grow and be profitable. Even if they do all this, they may still run out and have to close down.

Among all this, defense tech has stood out. This is mainly because of global events: tensions between countries, terrorism, wars and wars are all being played on a technological scale these days. That means that not only do we equip our soldiers with better tools but we also have the potential to use technology to carry out any action to reduce casualties.

“Military spending is countercyclical,” stated Tseng in an interview. Talk to a consumer or an enterprise business and you will see that spending falls in a recession. The government is a steady Eddie. Modernizing the military requires a plan and a path. It will continue to execute that .”

All of this is what drives business for the top startups in the space and that in turn is attracting investors.

“Automated defence capabilities will play an increasing essential role in our defense programmes and are critical for our ability to stay competitive,” Tull stated in a statement. “Shield AI is a pioneer in this space, utilizing cutting-edge technology to pilot AI aircraft. We are proud to support Shield AI in their defense .”

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ShieldAI is based in San Diego. We previously called it the Silicon Valley for the defense industry. It’s home port for the U.S. Pacific fleet. According to stats gathered from the city’s chamber, greater San Diego receives more defense spending than any other location in the U.S. Shield, as well as dozens of smaller defense contractors.

The company already has a number of aircraft as well as its Hivemind autonomous flying software on the market and deployed with customers (e.g., in the F16 plane pictured above) — Shield AI is part of the U.S. Department of Defense Program of Record — and it’s working on a number of other projects, including VTOL autonomous plane software and hardware, and “swarming” capabilities to jam signals or to help their customers communicate when their signals are being jammed.

Indeed. The large size of Shield AI’s round, $225million, is not only a sign of this demand but also the high development costs associated with this industry. It comes just 11 days after Anduril, another defense tech startup working on autonomous systems, confirmed that it had raised close to $1.5 billion at a $7 billion valuation.