How AI is changing defense technology

➤ Shield AI has raised more than $1 billion in equity and some debt, including a recent round in 2023.

➤ The company has made three acquisitions, including an AI piloting system, an image analysis company and a drone maker.

➤ Shield AI sees a future in which AI could power all defense tech to accomplish missions without GPS, communications or remote pilots.

Since its launch in 2015, Shield AI Inc. has become a rare aerospace and defense technology unicorn, valued at $2.7 billion, according to S&P Global Market Intelligence. The company has used its funding growth to make three acquisitions, including its April agreement to buy Sentient Vision Systems Inc. Shield AI's key offering is an artificial intelligence-powered system that can pilot fighter jets and drones without GPS, communications or remote pilots.

Shield AI makes money by securing and fulfilling government contracts but does not rule out launching commercial or enterprise products in the future. S&P Global Market Intelligence sat down with Shield AI co-founder and President Brandon Tseng to discuss the company's journey and the state of defense tech. The following conversation has been lightly edited for clarity and space.

S&P Global Market Intelligence: Explain how the idea of building an AI pilot was born?

Shield AI co-founder and President Brandon Tseng Source: Shield AI.

Brandon Tseng: I was a US Navy Surface Warfare Officer and Navy SEAL. My experiences in combat combined with my technical background in mechanical engineering led me to explore how AI and autonomy can be used to make an impact and solve problems that I had faced, such as national security and global stability.

Back in 2015, I asked myself, "What does the military of 2035 look like?" And I decided that AI should be piloting and commanding every military asset. With this vision in mind, I recruited my brother Ryan Tseng, our CEO, along with our third co-founder, Andrew Reiter, to start Shield AI with the mission of protecting service members and civilians with artificially intelligent systems. We are building the world's best AI pilot — or, in other words, the best self-driving technology for defense aviation. Our AI pilot Hivemind enables aircraft to maneuver without GPS, communications or remote pilot, and we are the only company in the world that can do this. Our AI pilot also enables functions such as swarming or teaming and can be taught a variety of different missions. Hivemind has flown six aircraft; in the next 12 months, it will fly two to three more.

What have been some of the early challenges you faced, and can you share how you overcame them?

When I started the company in 2015 alongside Ryan and Andrew, the defense technology investment class was nearly nonexistent among venture funds. In fact, Shield AI is only one of two multimillion-dollar defense technology companies built in the last 20 years. Thankfully, we have an intelligent and dedicated team at Shield AI that worked tirelessly to not only acquire funding but to also find solutions to how we can develop autonomous aircraft without using GPS or communications.

It has been days of sleepless nights driving Shield AI for the past nine years, but it is worth it. Today, we have mature products protecting service members and innocent civilians on the front line.

You've raised over $1 billion to date. Is it easier to raise money now versus when you started?

Fundraising is never easy. Our latest round was in December 2023 where we raised $500 million in a Series F. If you have a track record of delivering in an industry that matters, your odds of success increase.

You've made three acquisitions so far. Are you planning more?

When acquiring companies, we look to see how these organizations can help fulfill our mission of protecting service members and civilians with intelligent systems and bring value to our company.

In 2021, we acquired Martin UAV LLC and integrated our autonomy software, Hivemind, into its vertical takeoff and landing unnamed aircraft. Later, we acquired Heron Systems Inc., which is known for defeating an F-16 and other AI pilots during the DARPA AlphaDogfight trials. This acquisition allowed us to accelerate the deployment of AI pilots and helped advance national security priorities. In April 2024, we announced a definitive agreement to acquire Australia-based Sentient Vision Systems, which specializes in passive optical detection using wide-area motion imagery.

We have all the tools we need to be successful, but we are always monitoring the market to see if there are other opportunities we can capitalize on. Right now, we are comfortable with our organic growth strategy and will augment opportunities as they present themselves in the future.

Is there anything wrong with the US defense now?

There are certainly things wrong with the US defense, but also a number of things done well. At a strategic level, the US must transform its force structure and how it fights. In the same way that naval aviation transformed force structures during and post-WWII, AI pilots will transform force structures of the future. Every day in Ukraine and the Pacific theater, we are seeing assets across air, land and sea come under GPS and communications attacks and be severely restricted or rendered useless. I don't think it is a controversial statement to say that at some point, it will be essential for every single asset to be powered, commanded and maneuvered by AI in order to accomplish missions without GPS, communications and remote pilots.

I do not think more defense is the answer, but we need quality defense software companies built to address the inevitable shift of force structure. This is required in a world where the leaders in AI and autonomy will be the winners in future conflicts.

You are working very closely with the defense primes? [Editor's note: The defense primes are the top contractors for the US government. They include Lockheed Martin Corp., The Boeing Co., General Dynamics Corp., RTX Corp.'s Raytheon and Northrop Grumman Corp.]

We have never viewed the defense world in an "us vs. them" mentality when it comes to the primes. Our goal is to move quickly and focus on what we do best, and partner with the primes where it makes sense to deliver the best AI pilots on the best aircraft for the Defense Department.

Aviation assets across military and defense are a big area of opportunity for Shield AI because if you look across them, everyone is interested in building uncrewed aircraft. By collaborating closely with jet aircraft manufacturers and making significant investments in our own resources, we are committed to introducing an AI pilot product specifically designed for unmanned jets. We bring the most advanced AI pilot technology to the forefront — with a software-focused team that does not exist with the prime defense contractors and other commercial aircraft companies.

Could you provide examples of how Shield AI's technology is being deployed in real-world defense scenarios and the impact it has had?

Our Nova quadcopter/Hivemind AI pilot has been deployed by the most elite special operations forces in the world and has been used on missions that require presidential approval. It was used on Oct. 7–8 to rescue hostages in Israel. We have more flight hours than anybody in the world flying an F-16 completely autonomously.

As the defense landscape evolves, what trends do you foresee shaping the future of the industry?

The value of an AI pilot will only continue to grow as modern warfare advances and more air, land, and sea platforms become unmanned. The ability to operate a pilot that can swarm without GPS or communications will be a critical component on the battlefield.

It's typical for adversaries to jam GPS and communication systems, which is why there are reports of 10,000 drones being lost per month in Ukraine. In a decade, AI pilots will fly all unmanned systems and enable the US and our allies to field millions of drones to deter conflict.