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  • Hidden Level won a 10-year contract with the US Army last year
  • Startup part of growing number of defense firms raising cash

Investors including Lockheed Martin Ventures and DFJ Growth have backed a drone defense company called Hidden Level Inc., the latest national security startup to snag substantial checks from venture capitalists.

In recent months Hidden Level raised about $100 million over the course of two funding rounds, which haven’t been previously reported. Its valuation is nearly $500 million, according to people familiar with the matter who asked not to be identified discussing private information.

Hidden Level aims to detect and track drones and other aerial objects — an increasingly critical element of modern warfare — using passive radar systems, meaning it can identify approaching aircraft without being detected.

In locations like Ukraine, and even New Jersey, drones have grown in importance. “The reality of what these small things can do is disheartening,” said Hidden Level Chief Executive Officer Jeff Cole, citing a failed attempt by a Tennessee man to blow up an energy substation in November using a drone. From a national security standpoint, “We’ve always had these oceans to protect us,” Cole said. “Now we are touchable and quite frail.”

Founded in 2018, Syracuse-based Hidden Level is hoping the US government will be a major customer of its technology, particularly as the Pentagon warms to startups. The company confirmed it won a 10-year contract with the US Army in 2024, but declined to elaborate on details of the project.

“This is the stage when we like to invest, when we have conviction,” said DFJ Growth Partner Randy Glein, who is joining Hidden Level’s board. Glein, who led his firm’s investment in SpaceX more than a decade ago, drew parallels between the two companies, which work closely with the government. “Customers, including the Army, have started to show real signs of adopting this technology.”

The startup uses the passive radar technology, which is a concept that’s been around for years, to make rugged hardware units that can move on a battlefield. It also makes software services and tools for customers to analyze air space threats.

The company, which brought in $5 million in revenue last year, expects to increase that number to $25 million this year, Cole said. The majority of its sales come from US government customers, including the US Army and Air Force, as well as police. Commercial customers currently comprise about 20% of revenue, he said.

Hidden Level aims to increase manufacturing of its newest hardware and expand its workforce to 160 from 100 over the next 18 months, Cole said. “This financing is all about scaling,” he said.

Written by:  @Bloomberg