Shield AI raises $2B for defense drone development, to acquire Aechelon

Shield AI last week said it is raising $1.5 billion in Series G funding at a $12.7 billion post-money valuation and $500 million in fixed-return preferred equity financing. The autonomy systems and defense drone provider plans to use a portion of the proceeds to acquire Aechelon Technology Inc., a simulation software company.

“We’re thrilled to continue our work and serve our customers under Shield AI,” stated Ignacio (Nacho) Sanz-Pastor, co-founder and CEO of Aechelon. “Their vision of a future filled with autonomous systems protecting service members and civilians, and deterring conflict, is inspirational.”  

Founded in 1998, Aechelon specializes in in geo-specific flight simulators and physics-based sensor AI training. The Sagewind Capital portfolio company said its Synthetic Reality (SR) platform realistically replicates real-world environments to enable both humans and machines to operate effectively in complex, detail-rich environments. South San Francisco, Calif.-based Aechelon added that SR has supported military training, simulation, and analysis missions for decades and now also supports civilian applications.  

Shield AI runs Hivemind on multiple platforms

Founded in 2015, Shield AI said its mission is to protecting service members and civilians with intelligent systems. Its products include the Hivemind autonomy software and V-BAT and X-BAT aircraft. The San Diego-based company said its technology actively supports operations worldwide.

The Hivemind software has already piloted 26 classes of vehicles including F-16s, jet-powered uncrewed aerial vehicles (UAVs), helicopters, drone boats, and ground vehicles. It was recently selected by the U.S. Air Force as a mission autonomy provider for Collaborative Combat Aircraft (CCA) and is actively conducting a flight test campaign of Hivemind onboard the Anduril YFQ-44A CCA.  

The Hivemind Foundation Model for Defense is a domain-specific AI model, explained Shield AI. It integrates high-fidelity simulation with data from real-world operations to help customers accelerate the adoption of AI pilots across new aircraft and missions. The company raised $240 million a year ago for Hivemind development.

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Achelon provides simulation for testing and training

Aechelon noted that the U.S. military and its allies use its high-fidelity simulation, physics-based sensors, and synthetic reality applications to train pilots and test advanced aircraft and autonomous systems before live flights. It supports a range of critical national security platforms, including the Pentagon’s Joint Simulation Environment (JSE).

Shield AI and Aechelon asserted that these investments reflect a shift in how defense capabilities are built — “increasingly shaped in software, trained in simulation, and improved through use.”

“The acquisition of Aechelon will accelerate the work we are doing with Hivemind, particularly in simulation like the Department of War’s JSE,” said Gary Steele, CEO of Shield AI. “It’s an incredible company with a fantastic team and a leading technology that plays a role in how we think about the AI pilot development lifecycle. It will also help advance our Hivemind Foundation Model for Defense, which is trained in simulation and continuously refined through real-world operations.”

Shield AI said it expects to close the acquisition after customary regulatory approvals. Aechelon will then continue to operate independently while serving customers across the defense ecosystem. Sanz-Pastor will report directly to Steele and remain responsible for Aechelon’s product and customer roadmap.

Investors support autonomous air power

Advent International led Shield AI’s Series G round, which was also co-led by the Strategic Investment Group of JPMorganChase’s Security and Resiliency Initiative. Existing investors, including Snowpoint Ventures, InnovationX, Riot Ventures, Disruptive, and Apandion, also participated.

“Shield AI is a rare asset with the potential to deliver strong growth over the coming years,” said David Mussafer, managing partner and chairman of Boston-based Advent. “V-BAT is rapidly scaling and delivering outcomes for militaries around the world. X-BAT is a huge opportunity to redefine air power in the fighter jet market.”

“Hivemind is one of the most experienced and proven AI pilots in the world,” he added. Mussafer will join Shield AI’s board of directors, and Todd Combs, head of the Strategic Investment Group for JPMorganChase’s Security and Resiliency Initiative, will join as a board observer. 

“Through our Security and Resiliency Initiative, we are investing in generational companies who are poised to accelerate innovation, reinforce the defense industrial base, and help advance and scale mission-critical solutions,” said Combs.  

Funds managed by Blackstone are investing $500 million of preferred equity financing, as well as committing an additional $250 million delayed draw facility to support future growth. In addition, Shield AI plans to use some of the funding for certain phases of X-BAT development.

Other recent investments in autonomous systems for defense include:

• $1.6 billion valuation for Hadrian, a provider of automated manufacturing
• $150 million Series B for Revel, which develops command and control software
• $110 million Series B for PDW Holdings, a drone supplier
• $100 million in funding for Overland AI, a maker of autonomous ground vehicles

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