Shield AI, a startup developing military drones and AI-powered software, is in discussions to raise a new round of funding at a valuation of at least $20 billion, according to a person familiar with the matter.
If the round is completed, it would mark a roughly 60% increase in the company's valuation compared to just five months ago. The 11-year-old company is pursuing this fundraising effort as its AI software "Hivemind," which enables autonomous drones to operate alongside fighter jets, continues to secure multiple contracts.
The talks come amid a broader wave of investor interest in startups building AI-driven weapons and defense systems.
In June, the U.S. Air Force contracted Shield AI to deploy Hivemind in its Collaborative Combat Aircraft program, an initiative focused on unmanned fighter jets. In May, the company secured a Pentagon contract to use the software in a pilot project involving coordinated drone swarms.
The San Diego-based startup also manufactures autonomous battlefield aircraft. In March, Shield AI completed a $2 billion funding round at a post-money valuation of $12.7 billion. That round was co-led by private equity firm Advent International and JPMorgan's "Security and Resilience Initiative," an investment arm targeting hard-tech sectors including defense, manufacturing, and energy, with participation from Blackstone Group.
Details on the lead investors for the new round have not yet been disclosed. Using some of the proceeds from its previous fundraising, Shield AI acquired Aechelon Technology, a defense tech startup specializing in simulation and sensor software, in June.
To date, Shield AI has raised over $3 billion cumulatively, with support from investors including Andreessen Horowitz, Disruptive, and the American Innovation Technology Fund. The company's product lineup includes the V-BAT drone, designed primarily for reconnaissance with vertical takeoff and landing capabilities similar to a helicopter, as well as the X-BAT autonomous fighter jet, which also supports vertical takeoff and landing without requiring a runway.
In June, Shield AI secured a $16 million contract with the Polish Navy to supply V-BAT drones. The latest funding discussions follow a string of financing deals across the defense and AI weapons systems sector.
Mach Industries, which also develops autonomous weapons, completed a $600 million funding round in September, doubling its post-money valuation to $3.7 billion. Covenant, a missile development startup, announced earlier this month that it had closed three funding rounds totaling over $250 million, led by investors including Andreessen Horowitz, Founder Fund, Lightspeed Venture Partners, Lux Capital, and 8VC.