(Bloomberg) -- NATO’s €1 billion ($1.1 billion) technology fund backed a German company that makes self-driving robots for militaries, its second public investment into a startup.

Munich-based ARX Robotics raised €9 million in seed financing, with over half coming from the NATO Innovation Fund, or NIF, the company announced on Monday. Germany’s Project A Ventures and Discovery Ventures also supported the round. 

The North Atlantic Treaty Organization launched its inaugural tech fund, which is financed by 24 of the 32 nations in the military alliance, more than a year into Russia’s invasion of Ukraine. It invests into new businesses in defense, cybersecurity and related areas at a time of rapid innovation on the battlefield. Last week, a UK startup that makes lightweight materials for spacecraft, cars and military applications received an investment from NIF.

The proliferation of cheap drones in the war in Ukraine has proven how critical robots paired with artificial intelligence software are in modern conflicts, according to NIF partner Chris O’Connor. “It’s only a matter of time before autonomy comes to the ground,” he said.

ARX says its ground robots, which run on treads, are inexpensive and modular. They can be fitted with equipment like radar, mine-sweeping devices or medical stretchers, and modified in the field. The company was founded by three German military veterans in 2022 and has built a total of 12 robots, which have been deployed in Germany and Ukraine. ARX had contracts for €308,000 in sales last year and another €1 million in the first quarter.

O’Connor said NIF will back startups that have the potential to sell across many NATO countries, offering militaries faster access to the latest technologies.

Some established defense contractors, like Rheinmetall AG and Milrem Robotics, already make unmanned ground vehicles. O’Connor said ARX’s robots can be more versatile and affordable, in part thanks to the startup’s software system, which is designed to be tweaked and compatible with other protocols. 

“It’s a bit like a Tony Stark setup,” said Project A partner Uwe Horstmann, referring to ARX’s research and development center. Project A introduced the company to NIF.

ARX sells three models for between €30,000 and €150,000 each. The largest can carry payloads of up to 1,100 pounds and travel roughly 25 miles on one battery charge, according to Chief Executive Officer Marc Wietfeld. So far, ARX has steered clear of offensive uses for its robots. “We’ve never had a weapon on it,” said Wietfeld. “But theoretically, of course, it would be possible.”

NIF has said that it will prioritize companies with “dual-use” technology that sells into both defense and commercial industries. ARX plans non-military applications, including a feature where its robots use lights, smoke and noise to simulate gunfire for shipping companies to deter pirates. It hasn’t sold any robots to non-military buyers yet. 

In addition to Germany and Ukraine, ARX said it is testing devices in Austria, Switzerland, Estonia and Hungary. Wietfeld said the military in Germany is a “lighthouse” customer that will attract other governments his way.  “The strategy is pretty clear,” he said. “Winning Germany, then winning Europe.” 

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