As of late 2024, South Korea’s major defense conglomerates have accumulated approximately $69 billion in undelivered orders. The South Korean government is accelerating investments in advanced weapon systems and expanding defense partnerships, particularly with Europe. Following the formal establishment of the EU-South Korea Security and Defense Partnership in 2024, coupled with sustained growth in vehicle and artillery exports, South Korea has become the second-largest arms supplier to NATO members in Europe.

Despite the scale of South Korea’s defense industry, few startups have emerged to challenge established giants. The country’s defense tech startup ecosystem remains nascent, highlighting a gap between its manufacturing prowess and early-stage innovation capabilities.

Bone AI, a newly founded startup headquartered in Seoul and Palo Alto, California, aims to build a fully integrated AI platform combining software, hardware, and manufacturing. The company develops next-generation autonomous systems—drones (UAVs), ground vehicles (UGVs), and maritime vessels (USVs)—primarily for defense and government clients under B2G contracts. While its long-term goal is full operational integration across all three domains, Bone AI currently focuses on defense-specific drones designed for logistics, wildfire detection, and counter-drone defense.

Founded by DK Lee (also co-founder of MarqVision), Bone AI has raised $12 million in a seed round led by Third Prime, with participation from South Korean strategic investor Kolon Group. Kolon’s expertise in advanced materials aligns with Bone AI’s ambitions in AI, robotics, and next-gen manufacturing, Lee told TechCrunch.

The startup has already generated revenue, securing a seven-figure B2G contract in its first year, totaling $3 million. Bone AI was also selected for South Korea’s government-backed "End-to-End Logistics Project," deploying drones and UGVs powered by its autonomous control systems.

Lee attributed rapid traction to Bone AI’s acquisition of Korean drone firm D-Makers and its IP within six months of founding. The company is merging its AI division with D-Makers and plans further acquisitions. Lee personally contributed over 10% ($1.5 million) to the funding round, emphasizing his commitment.

Bone AI is Lee’s second venture. His experience with MarqVision convinced him AI’s next frontier lies beyond digital realms—in the physical world. To build Bone AI, Lee immersed himself in robotics, cold-emailing engineers behind Google’s RT-1/RT-2 and even approaching Tenstorrent CEO Jim Keller at a café.

Lee positions Bone AI as a "physical AI" company, integrating AI simulation, autonomous algorithms, embedded engineering, hardware design, and mass manufacturing. He noted a disconnect between AI and hardware development, with no "connective tissue" enabling scalable smart machines—a gap Bone AI aims to fill by leveraging South Korea’s manufacturing heritage (home to Hyundai, Samsung, and LG).

While U.S. firm Anduril (valued at $30B+) and Europe’s Helsing (~$13B) dominate their markets, Asia lacks comparable players. Third Prime’s Michael Kim cited Bone AI’s alignment with sovereign AI, multipolarity, and reindustrialization trends. South Korea’s cost-competitive hardware expertise in industries like semiconductors and shipbuilding offers a foundation.

"Many niche hardware firms in Korea lack Silicon Valley funding," Kim added. "Bone AI’s ‘acquire, not build’ strategy accelerates product maturity by consolidating these assets."