Helsing built a $4.5 billion company on the promise of reworking Europe’s military with software, not hardware. Now the course is reversing and a fleet of attack drones is planned.
From Iain Martin And David JeansForbes contributor
When Helsing’s CEO When co-founder Torsten Reil took the stage at a technology conference at a London church-turned-venue last September, his vision for the $4.5 billion defense startup was clear. “We are not a hardware company. We are a software company. That’s all we do,” he said said.
The pitch was fundamentally different from that of other defense startup entrepreneurs like Anduril billionaire Palmer Luckey or Shield AI’s Ryan Tseng, who need to construct their very own missiles and drones and eventually challenge defense giants like Raytheon or Lockheed Martin. Reil said Helsing would as an alternative focus solely on software and use AI to empower Europe’s militaries and weapons manufacturers. “It’s specifically about adding functionality to existing assets,” explained Reil, a former video game developer one other event in 2022.
Now he has made a 180 degree turn. Helsing this week unveiled the HX-2, a drone with a 50-mile range able to swarm hunting and destroying armored vehicles. “When used on a large scale along borders, HX-2 can serve as a powerful defensive shield against enemy land forces,” Helsing co-founder Niklas Köhler said in a press release.
Peter Quentin, a Helsing spokesman, said the corporate recently began producing the HX-2 drones in Germany, adding that they’re cheaper than comparable systems. Riel told Bloomberg Earlier this week, the corporate said it plans to supply tens of hundreds of those devices per yr, adding that the drone “has the ability to create a level of deterrence that is simply not currently feasible.”
Helsing’s move follows a series of deals the corporate has signed with European weapons makers resembling German Leopard tank maker Rheinmetall and aircraft maker Airbus, in addition to Swedish aerospace group Saab. Co-founders Reil, Köhler and Gundbert Scherf had pitched investors for his or her AI, which was used to upgrade the radar system of Saab’s Griphen fighter jets and to modernize the German Air Force’s Eurofighter.
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The company began developing and manufacturing its own drones after it couldn’t find an existing product that met the required specifications, said a Helsing investor who requested anonymity to talk freely. “There is no cutting-edge in this space and these drones are quite commercialized, but it is with AI and autonomy that they become groundbreaking,” the investor said. “If you want to bring AI into the drone space, you need some vertical control.”
Quentin von Helsing denied that the corporate had difficulty finding a partner. “We work with industry across the board whenever possible to pursue approaches that are truly software-defined, but refuse to simply subcontract when that is not possible.”
According to Pitchbook, investors have poured greater than $100 billion into defense startups since 2019, but only Anduril, which raised $1.5 billion at a $14 billion valuation this yr, has similar resources like Helsing. Helsing’s value rose to $4.5 billion in July after it raised $480 million from American enterprise funds General Catalyst and Accel Forbes. That followed an earlier $325 million capital raise from investors including Spotify billionaire Daniel Ek’s investment firm since its founding in 2021.
Europe’s most useful defense startup is now entering an incredibly competitive landscape. Aside from Chinese-made drones dominating the market, Helsing also faces an uphill battle against American incumbents like Anduril, Shield AI and Skydio, which have been constructing small, expendable drones for years. It could also impact the territory of its own partners resembling Saab, Airbus and French rocket maker MBDA, all of which have their very own drone programs.
Defense startups have faced major challenges using drones in Ukraine, where the Ukrainian army has found success by producing hundreds of drones with off-the-shelf parts as an alternative. Daily tinkering and updating near the front lines have helped them stay ahead of the invisible battle with Russia, jamming the radio signals and GPS technology that enables the drones to navigate and receive instructions from operators . The level of disruption is so severe that each Russian and Ukrainian forces are actually using drones connected by fiber optic cables, giving pilots hard-wired controls.
U.S.-made drones, meanwhile, were less effective, with lots of them crashing or breaking down. “The biggest challenge is electronic warfare with jamming and spoofing, and that’s why US-made drones don’t work so well in Ukraine,” says Kateryna Bondar, a Wadhwani AI Center fellow on the Center for Strategic and International Studies.
Still, firms like Shield AI and AeroVironment have signed contracts to provide drones to the Ukrainian Defense Ministry. The German company Quantum Systems also builds its own UAVs in Kyiv.
“Companies that are trying to understand what Ukrainians are achieving and know where the sweet spot is need to get involved on the ground,” said Andrew Michta, senior fellow on the Atlantic Council. “And quite honestly, some of our technological solutions don’t hit the sweet spot.”
Helsing’s pivot surprised some. Quantum Systems founder Florian Seibel, who unsuccessfully asked Reil to take a position in his own military drone startup, said his message remained consistent: Building hardware is a race to the underside on prices. “He concentrated entirely on software,” remembers Seibel. (In a now-deleted LinkedIn post previously reported According to Bloomberg, Seibel had criticized Helsing’s plans for its recent drone, saying: “The war in Ukraine is deadly and should not be used for marketing purposes.”
Other defense founders have warned that the character of the military’s procurement process has made software difficult to sell. “Selling software without a hardware product is almost impossible,” said a founding father of a defense startup Forbes. Shield AI co-founder Brandon Tseng testified congress in September that the U.S. Department of Defense often treats software as an afterthought in deals focused on hardware.
Reil’s company will not less than have a head start in Ukraine. The company opened an office in Estonia last yr and has reportedly had employees in Ukraine since not less than 2023 Wired. It is feasible that drones might be tested in motion as early as this month. German Defense Minister Boris Pistorius announced in November that 4,000 drones equipped with Helsing’s AI software can be donated to Ukraine starting in December.
This shouldn’t be Helsing’s recent HX-2, but a less expensive wood model called the HF-1, made in Ukraine by local startup Terminal Autonomy, sources near the deal said Forbes. Helsing says these drones have already been certified by the Ukrainian government and can use its AI and computer vision technology to navigate the battlefield without satellite support. The BBC reported Earlier this yr, it was revealed that Terminal Autonomy’s Bayonet drone cost just a few thousand dollars to supply.
Helsing said it plans to make use of its latest funding, one in all Europe’s largest funding rounds this yr, for its research and development and to assist “secure NATO’s eastern flank.” The company has revealed few details about its AI-powered software, only hinting that the tools give commanders a possibility Overview of the battlefield.
But Reil and his investors now appear to be betting that hardware is simpler to crack than software. “We always talk internally about the fact that the leap in capability we want to make is always at least tenfold,” said Reil on the event in September 2023. “And that is not a marketing claim for us.”
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