Tougher fundraising The environment reveals which companies and sectors investors have true conviction in and which areas are unattractive outside of a bull market. ai startups dominated negotiations this year, but there’s another sector that venture capitalists have remained committed to: defense technology.
We saw the latest example of this trend this week. On Tuesday, Shield ai raised a $200 million Series F round led by Thomas Tull’s US Innovative technology Fund, with participation from Snowpoint Ventures and Riot Ventures, among others. The round values the San Diego-based autonomous aircraft and drone startup at $2.7 billion.
The sheer size of the round alone makes this deal interesting. “Mega waves” of more than $100 million have become rare enough to raise eyebrows in the current climate. Through the third quarter of 2023, only 194 rounds above $100 million have been raised, compared to 538 in 2022 and 841 in 2021, according to PitchBook. Late-stage fundraising has also remained largely muted for much of 2023. Just over $57.3 billion was invested in late-stage startups during the third quarter of this year, far less than the $94 billion million dollars that these companies raised in 2022 and the 152 billion dollars that we raised. Saw in 2021.
Brandon Tseng, co-founder and president of Shield ai, told TechCrunch+ that his company was able to grow in this environment in large part because of its metrics. The company’s revenue is growing 90% year over year, according to Tseng, and it is on track to become profitable in 2025.
This round is also made more interesting by the space in which the company operates, as it is the latest sign of how much investors have shifted towards defense technology in recent years.
Tseng agreed that investor appetite for companies like his has greatly improved and recalled how Shield ai‘s early fundraisings were particularly difficult.