Israeli developer of VR drone system used by IDF in Hamas war raises $40m

Tel Aviv startup Xtend, a developer of a human-guided AI drone and robots operating system that was tested and deployed by the Israeli army in a dense urban battlefield during the ongoing war with the Hamas terror group in the Gaza Strip, has raised $40 million in fresh capital in a private funding round.

Since October 7, which saw thousands of Hamas-led terrorists storm southern Israel to kill nearly 1,200 people and take 253 hostages, triggering the ongoing war in Gaza, hundreds of Xtend’s systems, including small drones with a portable virtual reality headset and a gestures-based handheld controller, have been used by the Israel Defense Forces.

The startup’s technology is helping soldiers perform complex and dangerous combat missions such as scanning tunnels and remote buildings for terrorists and explosives, or launching grenades, without having to risk their lives.

“Our core vision is to literally save lives by sending a drone or a robot instead of a soldier into the battlefield,” Xtend co-founder Matteo Shapira told The Times of Israel. “It is happening but not on a very massive scale.”

“We are not seeing entire war scenarios where the soldiers are back at the command center and everything is being done by robots, but we are seeing that for critical mission activities robots are being sent in first,” he added.

Xtend was founded in 2018 by brothers Aviv and Matteo Shapira, who previously co-founded Replay Technologies, which was acquired by Intel in 2016 for $175 million; Rubi Liani, founder of the Israeli Drone Racing League; and defense and UAV expert Adir Tubi. The technology behind the startup’s human-guided drone operating system was initially developed to help the Israeli army shoot down incendiary balloons on the border with Gaza.

Xtend’s operating systems, include small drones used with a portable virtual reality headset and a gestures-based handheld controller. (Courtesy)

Xtend has built a human-guided autonomous operating system utilizing AI that it says enables users, even without any experience, to fly a drone or navigate robots to perform accurate maneuvers in any scenario, indoors and outdoors, without relying on GPS, and with minimal training.

The mobile, lightweight system uses virtual reality and sensor fusion technologies and allows for multiple robotic devices, from drones to quadcopters to be deployed in parallel using a seamless interface. Before the outbreak of the Hamas war, Xtend’s biggest client was the US Department of Defense, Shapira said.

“What happened during the war is that we have passed three-digit numbers in terms of our systems used by the Israeli army and hopefully it will yield big tenders, but for now we are still in emergency mode,” said Shapira.

The financing round for Xtend was led by Chartered Group with participation from existing investors NFX, TAU Ventures and strategic investors including Clal-Tech. To date, the startup has raised a total of about $65 million.

Shapira said that the newly raised capital will be invested to bring Xtend’s operating system to the next level and expand its deployment beyond the defense to the civilian space for enterprise business, logistics and delivery.

“We are moving from a vision of making robots and machines very accessible, which is the original vision of Xtend to allow a police officer, soldier, or firefighter to easily interact in a remote environment towards a vision where there is more of a work split between the human and the machine,” said Shapira. “The next generation will allow drones through machine learning capabilities to learn from the hundreds of different missions that occurred before, so that they can make micro decisions on their own for example when entering a building whether to go through the door or to go through the window, or to go deeper inside or not.”

Founders of Israeli drone startup Xtend.(Courtesy)

For example, a field commander could have a team of five soldiers and five robots, and he controls the latter not by operating them but by communicating with them via a GPT type of communication, Shapira said.

“The idea is that we train robots to identify objects and navigate complex environments, but always keep a human being at the center to make strategic decisions,” Shapira remarked.

Xtend said it will use the newly raised funds to further expand its sales teams and footprint globally, focusing on the US, Germany, the UK and Singapore, as more countries seek defense solutions, Shapira noted. The startup has 110 employees of which 60 are in Israel and the remainder in overseas offices.

“We are just entering the Japanese market and are beginning to enter the Emirates,” said Shapira. “We see this funding round as the platform to make money to be profitable versus spending more money than then we are earning.”