The modern battlefield is increasingly autonomous and software-driven, fueled by foundational developments in AI. Within 15 years, robots, drones, and other autonomous systems are projected to make up as much as 1/3 of the US military’s operational forces. Unmanned systems already dominate aerial drones.
The 10 largest US defense contractors, commonly referred to as “the primes” (including Lockheed Martin, RTX, …), control 80%+ of all aerospace and defense contracts. These primes operate under a traditional cost-plus contracting model, which offers limited incentives for rapid innovation or cost reduction.
However, this dynamic is shifting. VC-backed startups are disrupting the traditional defense contracting model by adopting a proactive approach. Instead of waiting for RFPs from government agencies, these startups are carrying the R&D burden upfront, allowing them to offer pre-developed, cutting-edge AI-based solutions.
This product-centric approach is a key differentiator for defense tech startups. And Shield AI has emerged as a leader among the next generation of defense tech companies.
Shield AI, founded in San Diego in 2015 by brothers Ryan and Brandon Tseng (a former Navy SEAL), focuses on developing advanced technologies such as AI-powered fighter pilots and drones for defense operations.
At the heart of Shield AI’s product ecosystem is Hivemind, an AI and autonomy stack that functions as the “brains” of their drones and aircraft. Hivemind has recently gained recognition for outperforming top gun fighter pilots in advanced dogfighting exercises.
Hivemind enables drones and aircraft to operate autonomously in swarms even in GPS-degraded environments. Reinforcement learning algorithms help their systems perform complex tasks, such as room clearing, without requiring human intervention.
Shield AI’s Nova-class autonomous quadcopter drones, powered by Hivemind, serve as critical reconnaissance tools in close-quarters combat. During military operations, these drones can navigate hostile buildings, capture photos, and generate detailed maps, which are then relayed to soldiers on the ground.
Expanding its product line, Shield AI acquired Martin UAV (Unmanned Aerial Vehicle) in 2021 and introduced the V-BAT, a self-driving vertical take-off and landing (VTOL) aircraft. This VTOL capability makes V-BAT highly adaptable for various mission types and terrains. Since then, V-BAT has achieved significant commercial success, with Brazil placing a batch order in 2022 and India recently forming a JV to manufacture V-BATs.
Shield AI has raised $800M in total funding, reaching a valuation of $2.7B, with Andreessen Horowitz serving as its primary repeat VC investor.
Conclusion
Deterrence tends to happen when a radical new technology emerges. AI will usher in the new era of deterrence.
Fabrica Ventures is proud to invest in Shield AI’s AI-powered deterrence systems.