Defense Startup Helsing Raises at €5 Billion Valuation to Expand Along NATO’s Eastern Flank

(Bloomberg) -- Helsing, a startup developing artificial intelligence software for defense, has raised €450 million ($487 million) in venture capital funding that it plans to use to expand its presence in European nations bordering Russia.

Formed in 2021, Helsing makes software designed to boost weapons capabilities, such as drones and jet fighters, and improve battlefield decisions. The company, which plans to announce its financing on Thursday, says it’s been active in Ukraine since 2022 and is in talks with countries on NATO’s eastern flank — Baltic and eastern European nations that face growing aggression from Russia. 

“The sense of urgency is extremely high and almost no different to Ukraine,” Gundbert Scherf, Helsing’s co-chief executive officer, said in an interview. “As a company founded in Europe and around European values, we think this must be the focus and mission.”

The latest round, led by General Catalyst, values the company at €4.95 billion ($5.4 billion), according to a person familiar with the deal who asked not to be identified discussing private matters. Scherf declined to comment on the valuation.

The startup is one of several defense newcomers attracting waves of venture capital dollars in the wake of Russia’s invasion of Ukraine. Defense budgets in Europe have ticked up and Baltic officials have raised the alarm over Russia’s aggressive use of tactics like GPS jamming. Despite the cash influx, some high-profile players, like US-based Anduril Industries Inc., have struggled to get traction in Europe, where governments are often reluctant to spend on new tech or providers outside their home turf. 

Helsing was formed in Germany by Scherf with co-founders Torsten Reil and Niklas Köhler. It positions itself as a pan-European operator, claiming headquarters in Munich, London and Paris. The startup is announcing its financing while NATO held its annual summit in Washington, DC, where support for Ukraine is a central concern.

Helsing has tried both working with established defense players and winning military contracts directly. The startup secured deals with Airbus SE and defense ministries in Germany and Ukraine. Jeannette zu Fürstenberg, managing director and head of Europe for General Catalyst, said Helsing’s procurement of a major government contract encouraged her firm to invest. “Europe needs to be able to defend itself,” she said.

Alongside the financing, Helsing announced a new entity in Estonia and committed to spend €70 million on Baltic defense projects over the next three years. Scherf said the company planned to open similar outposts across the region.

Kaja Kallas, Estonia’s prime minister, said Helsing’s entrance was “very welcome” in her country. “That is what I have been advocating,” she said in an emailed statement. “We need actions, not just words.” 

Helsing executives declined to share its number of contracts or sales. But Scherf said an undisclosed maritime contract, finalized in recent months, gave Helsing reach into military operations by land, sea and air. “It was always part of our ambition, and we’ve achieved that,” he said. 

Earlier this year, Helsing agreed to work with Ukraine to implement AI into drones, which have transformed the battlefield.

To date, Helsing has raised €769 million from investors including Prima Materia, an investment fund co-founded by Spotify Technology SA founder Daniel Ek, and Swedish defense supplier Saab AB, which participated in its financing last September. Joining the newest round are a slate of first-time backers: Accel, Lightspeed Venture Partners, Plural, Greenoaks Capital Management and Elad Gil, a prolific Silicon Valley investor. The Financial Times and Forbes reported earlier on aspects of Helsing’s latest deal. 

Reil, Helsing’s co-CEO, said the new money will be used to develop products and train AI datasets at the company, which is just shy of 300 employees. 

Some of those resources will go to maintaining software that Reil says ensures humans, rather than autonomous systems, make final decisions on any lethal operations. “It’s one of the core beliefs of the company,” he said, adding that this was despite some “adversaries” taking the opposite tack.

(Updates with further context throughout)

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