According to sources familiar with the matter, military drone and AI software startup Shield AI is in discussions for a new funding round that would value the company at no less than $20 billion. Should this round be completed successfully, the company's valuation would climb roughly 60% compared to just five months ago.

The 11-year-old enterprise has secured multiple contracts thanks to its AI software platform called "Hivemind," which coordinates drone operations alongside manned fighter jets. This funding initiative comes as investors continue to pour capital into startups developing AI-powered weapons and defense systems.

In June, the US Air Force awarded Shield AI a contract to deploy Hivemind software within the Collaborative Combat Aircraft program, an initiative aimed at developing unmanned fighter jets. The company also secured a contract from the US Department of Defense in May to apply Hivemind in a pilot program focused on coordinated drone swarm operations.

The San Diego-based startup also manufactures autonomous aircraft for battlefield use. In March, Shield AI closed a $2 billion funding round at a $12.7 billion post-money valuation. That round was co-led by private equity firm Advent International and the security and resilience investment arm of JPMorgan Chase, which focuses on hard-tech businesses in defense, manufacturing, and energy. Blackstone Group also participated in that financing. The lead investor for this latest round has not yet been disclosed.

Shield AI utilized a portion of the previous round's capital to acquire defense tech startup Aechelon Technology in June. That company specializes in simulation and sensor software. To date, Shield AI has raised more than $3 billion in total funding, with investors including Andreessen Horowitz, Disruptive, and the American Innovation Technology Fund.

The company also develops two aircraft platforms: the V-BAT, a reconnaissance-focused drone capable of vertical takeoff and landing like a helicopter, and the X-BAT, an autonomous fighter that also supports vertical takeoff and landing without requiring a runway. In June, Shield AI secured a $16 million contract for the Polish Navy to acquire a number of V-BAT drones.