Defense Business Brief: This Ukraine-founded drone maker is now worth $6 billion. What now?

Build more, faster—and then integrate it all together. That was the gist of my conversation with  Oleg Rogynskyy, CEO of Ukraine-founded drone company UFORCE, that’s now valued at more than $6 billion after landing a $700 million series A funding round this week. 

“Our m.o. is to go to exercises and actually do stuff,” Rogynskyy said via video conference while at a defense conference in Oslo, Norway. “The unmanned surface vessels have had a massive impact on the Black Sea fleet. That has been public and recorded. Our Nemesis UAV platform has destroyed over 10,000 Russian vehicles. We know we shine the best when we are in real operations.”

And now with “a very deliberately designed funding round” complete, the next move is to become ubiquitous. 

It “supports our mission to help Ukraine defend itself, but also bring out these platforms…that have been so effective in making defense operations so much cheaper and so much more effective in Ukraine to help the rest of the democratic world defend itself and prevent a future war,” he said.

Valor Equity Partners and the U.K.’s National Wealth Fund led the funding round. The U.S.–Ukraine Reconstruction Investment Fund, URIF, which was first funded by the U.S. International Development Finance Corporation, also participated and its investment will go towards UFORCE’s Ukraine operations and research and development. Other notable investors include Menlo Ventures and Shield Capital. 

“This round is helping us scale manufacturing, R&D both in Ukraine and outside Ukraine—where it’s [needed] to support Ukraine—as well as our presence in key markets and partnerships,” he said. 

Scaling manufacturing is expensive and requires a different approach for a country at war, but the lessons could be applied elsewhere. 

“In Ukraine, for example, you have to approach manufacturing very differently because of the threat of airstrikes,” Rogynskyy said. “You cannot build large factories with big logos on the roof in Ukraine. You have to be very discreet, and you have to be very flexible, while not impacting your economics.” 

That means distribution centers, a flexible supply chain, and malleable assembly lines that can adjust for volume, while remaining secure.

Rogynskyy declined to specify production numbers, timelines, or hiring goals. Instead, he said, the company has doubled revenue and tripled its staff to more than 1,000 people in the past year.

Now that the funding round has closed, UFORCE is putting together next year’s operating plan. 

“You're gonna see more USVs, more effectors on the USVs. You're gonna see more integration of our other products”—includng with unmanned ground vehicles and aerial drones—and “you're gonna see new energy-based capabilities coming out. So, energy effectors,” Rogynskyy said. 

There will also be more software integration, autonomy, and AI to help manage large numbers of drones. And new products will crop up as mergers and acquisitions get underway. 

And the main challenges that lie ahead are “people and politics,” he said.

“The products are there. The capital is there. The know-how is there. The IP is there. The demand, unfortunately, is there. So it’s all about execution now.”

Welcome

You’ve reached this week’s Defense Business Brief with Lauren C. Williams and Jennifer Hlad, where we dig into what the Pentagon buys, who they’re buying from, and why. Send along your tips, feedback, and song recommendations to [email protected]. Check out the Defense Business Brief archive here, and tell your friends to subscribe!

A battery-powered Pacific. Two companies have teamed up to deliver “expeditionary power systems” to the military in the Indo-Pacific, which could help keep bases and installations operating for months in case of power grid failure. 

• “One of the major constraints that we run into working at Schofield [Barracks], and would see the same thing throughout the Pacific, is that power is not readily available through most of the grid, if there even is a grid,” said Kevin Beamish, chief operating officer for BG Workforce Solutions, which is the implementing contractor at The Forge, U.S. Pacific Command’s expeditionary foundry. 
• “One, the capacity isn’t there. Two, the quality of the power isn’t very good as well, so the linkages oftentimes are not right, or there’s brownouts or blackouts or power surges.”
• BGWS is working with Guam-based Blue Ocean H2 to bring an alternative power source, called ORCA, to far-flung Pacific islands—one that is disconnected from the power grid, which can be subject to outages or cyber attacks.
• What Blue Ocean has developed is “a non-lithium battery storage system that doesn’t have a lot of those risks,” Beamish said, noting that they can be shipped fully charged.
• “Essentially, what they do is they take any ambient power source—that can be solar power or diesel or the grid—and they condition that power, meaning they clean it up and then they store it.”
• The companies are already working with the Pentagon and expect to have the first unit in Hawaii later this year.

BONUS: Fuel from fresh air? AIRCO has developed technology to take electricity, along with carbon dioxide and water from the air to produce what CEO Gregory Constantine called “drop-in” fuels for engines—diesel, jet, and rocket. The company has also integrated that technology into a shipping container-sized refinery it can mass produce.

• Even if a base has “a microgrid, or if you have ways to get power in these areas, water and other resources, you still need to have liquid fuels as well, because you can electrify as much as possible but there are a lot of things that still can’t be electrified,” he said.
• “And so, rather than relying on a refinery somewhere on the other side of the world that’s, you know, shipping your fuel thousands and thousands of miles around the world, you truly have the ability to be self-sufficient and self-sustained as well.”
• The company has tested its fuels in U.S. Air Force planes, U.S. Marine Corps boats, and U.S. Army land vehicles, Constantine said, “and it performs the same, if not actually better—it burns a little cleaner than a traditional fuel.”
• A little more: “You now have the ability with modern technology to produce fuel synthetically, and what we’ve done now is given customers like the U.S. military the ability to produce fuel exactly where you need it, so you do not have to transport it. So it’s cheaper, and you don’t have to go through the entire burden of logistics as well. All you need is electricity.”

Making moves + other news

• Q-CTRL, which makes quantum infrastructure software, closed a $290 million series C funding round.
• U.S. Africa Command awarded Merlin a $500,000 contract to test autonomous pilot tech for casualty evacuation missions. 
• Allen Control Systems is exploring directed energy with a dedicated division, and a new partnership with laser-maker Attalon. 

• Army awarded a $2.5 million contract for Safe Pro Group’s AI tech stack that, when integrated with Anduril’s Ghost-X drone, will protect Abrams tanks from threats detected through aerial reconnaissance.