March 26 (Reuters) – **Shield AI**, a defense technology startup, is set to raise **$2 billion** in a new funding round that values the company at **$12.7 billion**. This move aims to expand its portfolio of **artificial intelligence-powered software** amid an increasing demand for autonomous tools in military conflicts.
The **Series G** funding round, announced on Thursday, is led by **Advent International** and co-led by **JPMorgan Chase’s** Strategic Investment Group. Existing investors, such as **Snowpoint Ventures** and **Riot Ventures**, also participated in the round.
In a notable contribution, **Blackstone-managed funds** are committing **$500 million** in preferred equity as part of this financing, alongside an additional **$250 million** delayed draw facility, potentially bringing their total investment to **$750 million**.
The rising use of autonomous technologies, particularly evident in recent U.S. and Israeli strikes against **Iran** and during **Russia’s invasion of Ukraine**, has driven demand for advanced flight software. Shield AI’s technology, particularly its **Hivemind** software, enables drones and aircraft to operate effectively in **GPS-denied environments** and has been tested on various platforms, including **F-16 fighter jets** and the U.S. Air Force’s uncrewed **Collaborative Combat Aircraft**.
A portion of the new funds will be allocated to the acquisition of **Aechelon Technology**, a simulation software maker currently under the ownership of private equity firm **Sagewind Capital**. Financial terms of the deal have not been disclosed. The acquisition is expected to enhance Shield AI’s development of Hivemind, particularly in simulation capabilities, aligning with the **Department of Defense’s Joint Simulation Environment (JSE)**.
CEO **Gary Steele** emphasized the strategic importance of the Aechelon acquisition, stating, “The acquisition of Aechelon will accelerate the work we are doing with Hivemind, particularly in simulation like the Department of War’s JSE.” The JSE serves as a high-fidelity virtual combat range utilized by the U.S. military for testing aircraft and autonomous systems against realistic battlefield conditions.
As defense sectors increasingly integrate autonomous technologies, Shield AI’s advancements could place it at the forefront of a rapidly evolving market. The ongoing conflicts highlight the critical role of innovative software solutions, which may redefine operational strategies in military engagements. With significant funding and strategic acquisitions, Shield AI appears poised to capitalize on this momentum and lead in the defense technology arena.
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