Steve Simoni, the cofounder of defense tech company Allen Control Systems, is giving me a tour of his startup’s new showroom when he points to a corner near the front window. That’s where the prototype of the autonomous gun turret they’ve built—called the “Bullfrog”—will go in about six weeks, he explains.
I’m almost surprised as I hear him say it and have to remind myself that we aren’t talking about some new virtual reality glasses or restaurant software. We’re talking about a gun turret —a real-world, real-dangerous system that can be mounted with M240 machine guns, then will use computer vision software to identify and aim at enemy drones, so a human can press a button for the system to shoot them out of the sky. If all goes as planned, these Bullfrogs will eventually be used on the battlefield by U.S. soldiers and their allies.
But it’s easy to forget that’s what we’re discussing as you talk to Simoni. While a former nuclear engineer for the Navy, he carries himself more like the cliché Silicon Valley founder: He’s sporting a black baseball cap flipped backwards, discussing his weekly defense tech podcast he records in a little studio in the showroom, and—right after our conversation—he will pull out a pen and start vaping outside after walking me out. The Virginia showroom we’re sitting in has a golf simulator where investors can come and hit balls while they wait for their flight at Washington, D.C.’s National airport a convenient 10-minute drive away.
“I’m just trying to get the word out of spreading the gospel of AI guns, because this is not a product that exists,” Simoni tells me as we sit and talk on the couches in the center of the room.
Allen Control Systems is among a new breed of startups that is emerging out of cities like San Francisco, Los Angeles, Austin, and Washington, D.C. that is drawing in gobs of capital to make products, weapons, and systems the U.S. military and its allies can use. The plan is to utilize venture capital dollars, rather than (or in addition to) government dollars to develop things like hypersonic missiles, drones, and satellites so that the U.S. can innovate faster and remain competitive against adversaries as geopolitical tensions grow. There was $2.5 billion invested in defense tech startups in the U.S. last year, up from $299 million in 2019, according to PitchBook. Defense tech unicorns like Anduril and Shield AI, which make autonomous systems and hardware like drones, have led the charge.
For its part, ACS recently raised $30 million in a Series A round to start commercializing its gun turret. Craft Ventures, which had also participated in the seed, led the round. ACS is Craft’s first pure-play defense tech investment, a testament to how defense startups are becoming more commonplace in VC portfolios. Inspired Capital and Rally Ventures also joined, and the State of Wisconsin Investment Board (SWIB), which manages assets for Wisconsin’s retirement system and other state trust funds, put in $6 million, too. (SWIB, through ACS, declined an interview and didn’t respond to Fortune’s subsequent request for comment on the round.)
“There have been a few investments we’ve made that have either sold to the government or sell to companies that sell to the government—but this has really been our first one,” says Jeff Fluhr, cofounder of Craft Ventures who led the Series A after flying down to Austin to see the Bullfrog. “It could be mounted on a truck. It, theoretically, could be mounted on a marine vessel. It could be mounted on a truck or a tank… It’s a very flexible kind of unit, and the only variable cost is the bullet each time.”
As we sit in the showroom, Simoni explains that, with the initial product finished, he is already plotting the Series B—a $100 million round. The company is growing fast as it tries to double its engineering team, from the 40 engineers currently on staff, and works on new iterations of the Bullfrog that will be compatible with M240 and M134 machine guns. The company recently hired a government affairs executive, Clay Armentrout, to oversee its relationships in D.C. Simoni is shifting into a president role, and COO Mike Wior is becoming CEO so that Simoni can spend more time on higher-level strategy, fundraising, and business-to-business revenue pipelines.
This year, Simoni says they are forecasting $50 million in revenue from two initial U.S. government contracts, which he said he couldn’t disclose specifics of yet, as well as international sales. ACS doesn’t sell the machine guns—only the turret and software, and it won’t disclose how much those cost—only saying that it’s comparable to the cost of one of Anduril’s vertical takeoff and landing Roadrunner counter-drone aerial vehicles.
Raising venture capital—as opposed to relying on Department of Defense research and development capital—has been an important part of ACS’ strategy, because it’s a new kind of weapon, Simoni says. He knew he would have to show that their product would work to be able to sell it to the government more easily.
For now, Simoni and Armentrout are the only ones working out of D.C., where they are meeting with lawmakers and defense officials and explaining their product. Most of the rest of the team is based in Austin, where Allen Control Systems can test its product on a third-party shooting range where it’s bought space. Simoni and the team also bring out policymakers and investors to the range to showcase the product.
As warfare increasingly moves to drones and other autonomous systems, the United Nations recently adopted a resolution regarding autonomous weapons systems. It requires informal consultations this year among member countries to discuss ethical, legal, and security risks around these systems, which are becoming increasingly prevalent—and controversial—around the world. The resolution won’t impact ACS, according to the company, because while it is automating the aiming process, humans are still in full control.
While defense tech startups like ACS may be gaining more traction with the Department of Defense and with lawmakers in D.C., they are up against the prime contractors like Lockheed Martin, RTX, and General Dynamics that continue to dominate the space and still get most of the weapons budget allocations. Startup founders and executives have to spend a lot of time in the Capital, explaining what they are building and trying to pitch their products to the various potential government buyers.
“I don’t love living in D.C, but it’s a major part of this,” Simoni says.
