In Europe, the drone startup landscape has exploded in recent years, with dozens of players including Germany’s Helsing and Quantum Systems and Ukraine’s Swarmer raising $100ms in VC funding in the last few months. But according to Lorenz Meier, cofounder and CEO of US- and Germany-based drone software startup Auterion, there isn’t space for multiple champions.
“For software, it's a winner takes all,” he tells Sifted at his hotel lobby in Berlin.
Auterion clearly wants to be that winner. It’s building an operating system for drones to enable them to swarm — autonomously fly together in coordination — and it equips mostly strike drones. Auterion just raised $130m in Series B funding led by US VC Bessemer Venture Partners, alongside the likes of Swiss VC Lakestar, to bolster its products as well as expand its footprint further into Ukraine and Taiwan.
Meier tells Sifted the company works with the governments of the US (where the majority of its revenues come from), Germany, Ukraine, Taiwan, the Netherlands and the UK. It also works with startup partners like Swarmer, which is building autonomous swarming software, and big German defence prime Rheinmetall.
Meier believes there will be local champions for what he calls “vertically-integrated” drone startups like Quantum Systems and Helsing, which both build physical drones as well as develop the autonomous software to fly them.
But despite many drone startups making their own autonomous software as well, Meier strongly pushes back on the idea of competitors. “It's incredibly simple: anybody who makes a drone is not a software company. End of story. You can pretend as long as you want.”
Software will be more ubiquitous — at least so Meier hopes. “Palantir actually nicely shows that: they won the US with Maven [its AI system], they won NATO with Maven, and announced a UK deal with Maven last week. …There is not a local OS or local AI company. It won't happen,” he believes.
The defence hype will ‘cool’ in ‘six months’
The last time Auterion raised funding was in 2022, when the world was quite different. Although the Ukraine war had just started, Meier says it was “harder” to raise back then. The latest round, by comparison, was "effectively" preempted by Bessemer, Meier says.
Still, Meier doesn’t think the current VC hype around defence tech will last long. “I expect it to be extremely macro driven; I'm expecting a natural cool down, because at some point everybody has made their defence bet. So, maybe six months,” he predicts.
That doesn’t mean he expects defence funding will vanish: because the geopolitical landscape is continuing to"deteriorate", there may be a lot more need for these types of products, and “you could argue that the industrial base expansion that has yet to happen is so big that you should be able to deploy $100bn+ into this industry comfortably, and we're not close.”
