Defense AI startup Helsing raises $487 million in Series C, plans Baltic expansion to counter Russian threat

Defense AI startup Helsing has raised €450 million ($487 million) in a Series C funding round led by General Catalyst as it plans to expand its presence in European countries bordering Russia. The announcement came as NATO’s annual summit in Washington, DC, is taking place, where Russia’s invasion of Ukraine is high on the agenda.

According to the above plan, Helsing has set up a new office in Estonia and plans to spend €70 million on Baltic defense projects over the next three years. The German-headquartered company also has offices in Munich, London and Paris and said the new cash injection will be used to develop its AI capabilities and expand its 300-person base.

Helsing develops AI software to process information from defense systems, increase the weapon performance of drones and jet fighters, and improve battlefield decisions.

Gundbert Scherf, co-CEO of Helsing, said in an interview with TechCrunch: “Ukraine has used technology to defend itself against the large-scale Russian invasion, and I think it was a huge incentive for us to help there, to use our technology and to carry out the mission that we set out three and a half years ago, which was to use AI to protect our democracies.”

Speaking about the move to Estonia, he said: “We are a company founded on European values ​​and defending European interests and democracies. That is exactly what is happening now in Ukraine. But of course it is also happening on our eastern flank, from Finland through the Baltics down to Poland. Estonia is a country that is obviously also a technological leader and the Prime Minister there is a strong believer in protecting European democracies. So it was a natural starting point.”

In a statement, Estonian Prime Minister Kaja Kallas said Helsing’s accession was “very welcome” in her country and that “we need actions, not just words”.

Co-CEO Torsten Reil added: “Putin has increased his defense budget to 7% of GDP, a level where it is quite clear that the target is likely not just Ukraine but a broader spectrum. We feel the urgency and responsibility to create a capability gap to be able to deter and, if necessary, defend Europe and NATO’s eastern flank.”

When asked where Helsing gets most of its AI computing power from, the company’s co-CEOs did not provide any information. Reil said: “We obviously use our own computing power. We use ‘edge’ devices and local computing power is always required. A few weeks ago we also announced Project Centaur, which is based on reinforcement learning to develop an AI for air combat. That requires a lot of computing power. That’s why we’re currently spending a lot of money on training and training agents. At some point we’ll have extremely high capabilities in air combat. And that’s where we use upscaled computing power.”

However, Reil said that although the company has a certain amount of computing capacity, it also involves third parties whose names he was not allowed to mention for “security reasons”.

To date, Helsing has signed contracts with Airbus SE as well as defense ministries in Germany and Ukraine, including the electronic warfare modernization of the German Eurofighter (with strategic investor and committed partner Saab AB), the AI ​​infrastructure for the Future Combat Air System (FCAS, with the HIS consortium), as well as a number of secret contracts in the maritime and land sectors, the company said in a statement.

According to a source who told Bloomberg, the latest financing round would theoretically value the company at around 4.95 billion euros (5.4 billion US dollars). The company itself, however, declined to comment on the valuation.

The startup is blazing a trail that is becoming increasingly popular for startups as defense technology shoots up the agenda of Western investors worried about both Russia’s belligerence and the potential threat from China. According to a report published last week by PitchBook, Silicon Valley has invested nearly $35 billion in defense technology startups in 2023, and over $9 billion so far this year.

At the same time, the West’s defense budgets are increasing, which opens up opportunities for founders and investors in this area.

While Anduril Industries Inc. could be the equivalent of Helsing in the US, few other European defense startups have managed to reach the scale of Helsing. This is partly because European government defense spending still lags behind that of the US.

With the new financing, Helsing has so far raised a total of 769 million euros from investors such as Spotify founder Daniel Ek and the Swedish defense supplier Saab AB. The latest round included Accel, Lightspeed Venture Partners, Plural, Greenoaks Capital Management and Elad Gil, an investor from Silicon Valley.

In a statement, Jeannette zu Fürstenberg, General Catalyst’s Managing Director and Head of Europe, said: “I am deeply convinced that Helsing is on its way to becoming a global leader in this category. As we see battles on European soil for the first time in decades, we believe the role of companies like Helsing has never been more important.”