Bone AI Raises $12M to Disrupt Asian Defense with AI Robotics

South Korea's Defense Industry and the Rise of Bone AI

As of the close of 2024, South Korea’s leading defense companies have secured approximately $69 billion in outstanding orders, as reported by various news outlets. Simultaneously, Seoul is intensifying its investments in cutting-edge weapons technologies and strengthening its defense collaborations, notably with European nations.

The establishment of the EU-South Korea Security and Defence Partnership in 2024, coupled with increased exports of both vehicles and artillery systems, has positioned the country as the second-largest supplier of arms to European members of NATO.

A Gap in Defense Tech Innovation

Despite this substantial industrial capacity, the emergence of startups capable of competing with established defense contractors has been surprisingly limited. The South Korean defense-tech startup ecosystem remains underdeveloped, revealing a significant disparity between the nation’s manufacturing prowess and its capacity for early-stage innovation.

Introducing Bone AI: A Unified AI Platform

Bone AI, a recently launched startup with operations in Seoul and Palo Alto, California, is aiming to address this gap. The company’s core objective is the development of a comprehensive, unified AI platform integrating software, hardware, and manufacturing processes.

Bone AI specializes in the creation of next-generation autonomous systems – including unmanned aerial vehicles (UAVs), unmanned ground vehicles (UGVs), and unmanned surface vessels (USVs) – for defense and governmental applications. The company primarily focuses on securing Business-to-Government (B2G) contracts.

While the long-term vision encompasses all three system types, Bone AI is initially concentrating on defense-oriented aerial drones. These drones are engineered to optimize missions such as logistical support, wildfire monitoring, and counter-drone operations.

Seed Funding and Strategic Partnerships

Founded by DK Lee, also a co-founder of MarqVision, Bone AI has successfully raised a $12 million seed funding round. This round was led by Third Prime, with participation from Kolon Group, a South Korean strategic investor with established expertise in advanced materials and manufacturing.

Lee emphasized that Kolon Group represents an ideal strategic partner for Bone AI, given the startup’s operations across AI, robotics, and advanced manufacturing. This was shared in an exclusive interview with TechCrunch.

Early Revenue and Government Recognition

The startup is already demonstrating financial viability, having secured a multi-million dollar B2G contract and generating $3 million in revenue during its first year of operation. Furthermore, Bone AI has been recognized as a winner in a South Korean government-supported, end-to-end logistics program.

This program will involve the deployment of UAVs and UGVs powered by the company’s autonomy technology stack.

Strategic Acquisitions and Founder Commitment

Lee explained to TechCrunch that Bone AI’s rapid success in securing contracts and generating revenue is partly attributable to the acquisition of a South Korean drone company, D-Makers, and its associated intellectual property (IP), just six months after the company’s launch.

The company is now integrating its existing AI division with the capabilities of the acquired company, with further acquisitions planned for the future.

Lee personally invested over 10% of the funding round, approximately $1.5 million, demonstrating his strong commitment to the company’s mission, both financially and emotionally.

From AI Models to Physical Robotics

This venture marks Lee’s second entrepreneurial undertaking. His experience co-founding MarqVision provided valuable insights into the development and scaling of AI products globally.

However, it also led him to believe that the next significant advancement in AI extends beyond the digital realm and into the physical world.

Lee described his preparation for his second company, stating he actively engaged with the robotics community, networked with leading engineers, and even sought informal meetings with prominent figures in the field.

A "Physical AI" Firm

Lee positions Bone AI not merely as a defense tech company, but as a “physical AI” firm. This encompasses advanced AI simulation, autonomy algorithms, embedded engineering, hardware design, and large-scale manufacturing, all integrated under a single organizational structure.

Bridging the Gap Between AI and Hardware

Lee observed a disconnect between the advancements in AI and hardware during his preparations. He noted that “No one was building the connective tissue, the industrial backbone that allows intelligent machines to exist at scale.”

He further pointed out that even Nvidia, a leading AI company, relies on a complex network of fabrication and manufacturing partners across Asia and Europe.

Leveraging South Korea’s Manufacturing Strength

Lee highlighted South Korea’s established track record in building global hardware manufacturing leaders such as Hyundai, Samsung, and LG. He believes this positions the country to support the emergence of more drone and small-robotics companies.

“Our mission at Bone is to build the supply chain for physical AI within South Korea, and then expand that capability to the U.S., Europe, and other allied countries,” he stated.

Comparison to Global Leaders and Market Opportunity

Companies like Anduril in the U.S. and Helsing in Europe have achieved significant valuations, demonstrating the market potential for advanced defense technologies. Even in smaller markets like Israel, companies such as Kela Technologies have gained substantial recognition.

Asia, however, has not yet seen comparable levels of adoption, according to Michael Kim, general partner at Third Prime.

Kim emphasized that Bone AI is positioned at the intersection of sovereign AI, multipolarity, and reindustrialization, addressing a critical need in the evolving global landscape.

A Strong Foundation for Growth

South Korea possesses a robust and cost-competitive hardware manufacturing base across diverse sectors, including heavy industry, shipbuilding, automotive, and semiconductors.

Kim noted the existence of numerous specialized hardware companies that have not yet received significant venture capital funding from Silicon Valley. He believes Bone AI’s “buy versus build strategy” will accelerate product development and commercial success.