Dusseldorf The German defense start-up Helsing receives 209 million euros in a new round of financing. The US venture capitalist General Catalyst, the Swedish Saab Group as a strategic investor and the venture capital firm La Famiglia are participating in the Munich company. Helsing announced this on Thursday.
The two-year-old technology company, which develops artificial intelligence (AI) for combat aircraft, submarines and tanks, is expected to achieve a valuation of 1.7 billion euros. This is what people familiar with the matter told Handelsblatt. Helsing is Europe’s first start-up in the defense industry to be valued by investors at more than one billion euros and to become a so-called unicorn.
This is remarkable for several reasons: On the one hand, it is difficult for young companies to gain a foothold in the defense sector. On the other hand, investments in defense technology are relatively new for many European venture capitalists, as they were considered taboo before the war in Ukraine.
But the founders of Helsing don’t just come at the right time with their vision. They have also managed to build trust with established companies and the Bundeswehr. The company was able to win its first important order.
Gundbert Scherf, Torsten Reil and Niklas Köhler want to upgrade existing weapon systems with software and AI. Warplanes, combat ships and tanks are usually developed over decades and are very expensive, but are quickly overtaken by technological developments. Helsing wants to counteract this. “Existing defense systems can be operated with software and AI at a completely different speed and precision,” says co-chief Gundbert Scherf.
The start-up has succeeded in building trust with established companies and the Bundeswehr.
(Photo: Helsing)
This can also be seen in Ukraine, which is resisting the Russian war of aggression by using new war software. The mass of weapon systems used is relevant, says Scherf. “But the use of the most modern technologies – especially artificial intelligence – makes the strategic difference.”
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Experts agree with him. Torben Arnold, air force officer and visiting scientist at the Science and Politics Foundation, recently told the Handelsblatt: “It has been apparent for years that there is a shift from hardware-defined to software-defined warfare.” That’s why companies like Helsing are “incredibly interesting.”
Helsing’s AI should be able to read manipulated radar signals
Together with the new investor, the Swedish arms company Saab, the company is now supposed to ensure that some older Eurofighter fighter aircraft are capable of electronic warfare. With the help of AI, the fighter aircraft will be able to evaluate radar signals faster and better in the future.
This is becoming increasingly impossible manually because opponents can manipulate their signals using software. This obfuscation and deception is called “spoofing.” Pilots can only recognize in time whether a signal is real or false with the help of AI, say the Helsing founders.
In the future, older fighter aircraft of this type will be able to evaluate radar signals faster and better with the help of Helsing AI.
(Photo: AP)
Specifically, the company with its 220 employees is building a software platform on which the sensor data streams can be received and processed. In the case of the Eurofighter, these are primarily radar signals and all the energies that illuminate the fighter aircraft. For submarines it would be sonar data, for example.
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However, potentially superior technology has so far not been a guarantee that start-ups will be taken into account in Bundeswehr procurement projects. There were often doubts as to whether the young companies would be able to remain on the market long-term and maintain their defense technology. This is probably why Helsing has teamed up with established companies. In addition to Saab, Helsing cooperates with Rheinmetall and Airbus.
In the USA, we can see that in the long term, tech start-ups do not just have to remain junior partners in defense projects. Elon Musk’s space company SpaceX has established itself there, for example to launch reconnaissance satellites.
Start-up investors have to change contracts for defense investments
Helsing boss Torsten Reil hopes that more founders in Europe will be encouraged to start up in the defense sector. “This round of financing shows that European companies don’t have to go to the US to get 200 million euros for technology development,” he says.
However, the USA has a head start when it comes to venture capital investments in defense technology. This can be seen, for example, in the portfolio of Helsing’s new US investor General Catalyst: The investment Anduril is known for military drones, Vannevar Labs offers software for evaluating military information, and Applied Intuition is developing a simulation platform for autonomous vehicles that are also used in the military could come.
Many investment companies in Germany, on the other hand, have so far excluded weapons investments in contracts with their financiers. This also applied to La Famiglia. Co-founder Jeannette zu Fürstenberg had taken a private stake in Helsing early on, but that didn’t initially work for her company. La Famiglia has now launched two new funds that are open to such investments.
“I am convinced that the development of original AI solutions is central to the European defense industry,” says the investor. Technological sovereignty is essential for Europe in the current geopolitical situation between China and the USA.
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Von Fürstenberg estimates the likelihood that the investment will also pay off financially as “very high”: “We already see clear indications that there is a market for Helsing’s technology.”
If Gundbert Scherf has his way, this market still has to grow. With a view to the arms investments since the start of the Ukrainian war and the “turnaround” speech by Chancellor Olaf Scholz, he criticizes: “A large part of the turnaround money is directed towards programs that were thought up before we knew the potential of the new technologies.”
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Scherf is now also calling for a “technological turnaround”: “We see in Ukraine that companies with modern evaluation technology need 40 to 60 percent less ammunition than others,” says the founder. “If we are more precise and effective, we need less ammunition. Software and AI can provide relief.”
Co-chief Torsten Reil believes such discussions are necessary, especially with a view to future deterrence tasks on NATO’s eastern flank. With today’s defense technology, the number of systems and the existing personnel, this “extremely long border with Russia” cannot be protected. “We can still order as much conventional technology as we want.”
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