A clear inflection point over the course of Q3 and Q4 of 2022 was in National Security Investment for American Competitiveness. As a result, this theme was also featured in the OODA Alamanac 2023 (Jagged Transitions). At OODAcon in October 2022, we identified over $15b being raised for new investment initiatives focused on national security and American competitiveness and we continue to cover those initiatives here. This wave of speculative national security investment represents a new privatization of national security technology initiatives and will create a forcing function for the adoption of new disruptive technologies. The $5 billion fund discussed in this post was one of the first of the $15b raise in Q422 – which continues in earnest in 2023.
US Innovative Technology Fund (USIT)
Investments to target defense, AI, biotech, cyber, space. Fund aims to enhance US strategic advantage vs. China
As reported by Bloomberg in September 2022: Thomas Tull…is raising money for a private investment fund that will count a unit of Guggenheim Partners among its biggest backers. The US Innovative Technology Fund is seeking $3 billion to $5 billion to invest in companies catering to the defense industry and the commercial sector, according to a fundraising document seen by Bloomberg.
Tull, who runs his own investment holding company known as Tulco, will be chairman of the new fund that will focus on growth- and early-stage companies in industries including quantum computing, artificial intelligence, cyber, satellites, biotechnology, and space. The new fund is not affiliated with Tulco, according to a person familiar with the matter, who asked not to be identified discussing the fundraising effort.
Tull sold the film and TV company he founded, Legendary Entertainment, to China’s Dalian Wanda Group in 2016 for more than $3.5 billion. He was known for using data analytics for the production, marketing, and distribution of multiple blockbuster films, including “Inception” and “The Dark Knight Rises.”
He then founded Tulco to focus on AI, machine learning, and analytics to help grow companies. The firm has backed medical scrubs supplier FIGS and insurance brokerage Acrisure, which raised money earlier this year at a $23 billion valuation and counts Guggenheim Investments as a backer. (1)
USIT-backed Shield AI
“Shield AI is a leader in this space, developing some of the most advanced and cutting-edge technology for AI piloting.”
Shield AI, a fast-growing defense technology company building AI pilots for aircraft, today announced it has raised additional equity capital from the U.S. Innovative Technology Fund (USIT).
This additional raise was done at the company’s Series E price and closes out the round at $225M, with $150M in equity and $75M in debt. The initial part of Series E was closed in June, which made the company the fourth venture-backed, multi-billion-dollar defense-technology startup in 20 years.
Shield AI’s Hivemind software is an AI pilot for military and commercial aircraft that enables intelligent teams of aircraft to perform missions ranging from room clearance, to penetrating air defense systems, and dogfighting F-16s. Hivemind employs state-of-the-art algorithms for planning, mapping, and state estimation to enable aircraft to execute dynamic flight maneuvers and uses reinforcement learning for the discovery, learning, and execution of winning tactics and strategies. On aircraft, Hivemind enables full autonomy and is designed to run fully on the edge, disconnected from the cloud, in high-threat, GPS, and communication-degraded environments.
“Automated defense capabilities will play an increasingly essential role in our defense programs and are critical to our ability to remain competitive,” said Thomas Tull, Chairman of USIT. “Shield AI is a leader in this space, developing some of the most advanced and cutting-edge technology for AI piloting. We are proud to be able to support Shield AI and the work they are doing in defense.” (2)
What Next?
- “Tull, who runs his own investment holding company known as Tulco, will be chairman of the new fund that will focus on growth- and early-stage companies in industries including quantum computing, artificial intelligence, cyber, satellites, biotechnology, and space. The new fund is not affiliated with Tulco, according to a person familiar with the matter, who asked not to be identified discussing the fundraising effort.
- The fund aims to invest in technologies to put the US at a strategic advantage over global rivals, particularly China, whose military investments and innovation “threaten the US-led global order that has been in place since World War II,” according to the [fundraising] document. The advisory board will count investors including Guggenheim’s Scott Minerd, Jim Breyer, and venture capitalist Joe Lonsdale.
- The new fund’s advisers will also have longtime government experience, including Ryan McCarthy, former Secretary of the Army, and Rear Admiral Wyman Howard, commander of Naval Special Warfare Command.” (1)
- “We fundamentally believe that the greatest victory requires no war, which is why deterrence technology like AI pilots for defense are so crucial. We are racing to put up swarms of highly intelligent aircraft to deter the next conflict and this new capital accelerates our efforts,” said Brandon Tseng, Shield AI’s cofounder, president, and former Navy SEAL. (2)
