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I sometimes get asked if I use AI to write this newsletter. I have tried it but find that it doesn’t quite write in my style. I have, of course, tried to teach it to be Samuel Burrell - to no avail. Perhaps GPT 6 will unlock that. In the meantime I will keep providing you with concise dual-use reflections, on a weekly basis. NEWS DeepSeek latest model to be compatible with Chinese AI chips Chinese artificial intelligence startup DeepSeek has hinted that China will soon have homegrown “next generation” chips to support its AI models, while announcing an update to one of its large language models. I wrote recently about why it makes sense to sell NVIDIA H20s to China. It’s not clear which chips DeepSeek used to train its most recent model (probably H20s). Or whether a new Chinese chip would rival the H20 (probably not). The Chinese Communist Party faces something of a conundrum. It understandably wants to reduce its reliance on American chips but can’t afford to cede ground in the race to AI dominance. It must therefore train its best models using the best chips available. At the moment, those are not Chinese. Meanwhile NVIDIA is apparently working on a new AI chip for China that outperforms the H20. Why? Because Jensen Huang, like all CEOs, has to create value for shareholders. Taiwan's new naval drones could counter a Chinese invasion Taiwan is rapidly developing a naval drone capability. Several types have apparently been trialled with a range of armaments. The Unmanned Surface Vessels (USVs) could enable Taiwan to disrupt and weaken an invasion fleet headed for the island. The Taiwanese designs are remarkably similar to Ukrainian USVs. Following their success against Russia’s navy in the Black Sea, Taiwan seems keen to implement the lessons learned. This type of low-cost, attritable platform could certainly complicate any invasion of the island. But China has learned its own lessons from the Black Sea. Russia has recently improved its ability to defend against Ukraine’s USVs, so there is unlikely to be a Moskva moment in the First Island Chain. Instead, Taiwan will need to focus on scaling the capability to present a credible defensive threat. The American defence tech company, Anduril, has identified this market opportunity and recently opened an office in Taipei. Elsewhere, Saronic, an American developer of small USVs, has just won a $392m contract to deliver maritime drones for the US Navy. For the investor, it’s clear that maritime autonomy is shifting from experiment to programme, with Taiwan and the US offering early test cases for adoption at scale. It will be interesting to see how Europe responds. China unveils space-debris catcher with possible military use Chinese researchers have created a small launcher that can capture space debris. The device uses a closed-gas, energy-absorbing mechanism to propel a capsule containing a net toward targets in orbit. On paper, the launcher would be employed to tidy up the exosphere, by pushing debris towards Earth where it would burn up on re-entry. But it is dual-use by design, with possible counter-satellite modalities in mind. It often strikes me that some of the most foundational technology for the modern world is now in orbit. That is perhaps even more true for the military, whose instruments in space determine battlefield awareness and strike precision. With the decreasing cost of launch the possibility of improving military capability back on Earth is growing exponentially. That presents both a problem and an opportunity. With the Outer Space Treaty lacking clear prohibition of kinetic space weapons, there is perhaps an investment opportunity for commercial dual-use platforms that straddle benign and offensive intent. There are a number of American companies already going after that. Soon Europe will have to catch up. FUNDRAISING Stark, a German developer of loitering munitions, raised a $62m round at a $500 million valuation. The deal was led by Sequoia. Blue Water Autonomy, an American developer of long-range autonomous ships for the US Navy that can operate for months at sea, raised a $50m Series A round led by GV. SpinLaunch, an American developer of satellites designed to provide broadband internet connectivity, raised a $30m round led by ATW Partners. Loft Dynamics, a Swiss developer of virtual reality flight training software, raised a $24m Series B led by Friedkin. ICEYE, a Finnish operator of satellites equipped with synthetic aperture radar (SAR), raised an $11m round. Vinci Fund, a firm owned by Poland’s development bank, provided the capital. Grid Aero, an American builder of low-cost autonomous cargo planes to resupply US forces in contested regions, raised a $6m seed round co-led by Calibrate Ventures and Ubiquity Ventures. Innerworks, a British startup that uses synthetic threat intelligence, device fingerprinting, and bot/AI detection to tell real users apart from AI fakes and block attacks on exchanges, raised a €3.7m seed round led by AlbionVC. EDGX, a Belgian developer of AI-powered edge computers for satellites, raised a €2m seed round led by imec.istart future fund and the Flanders Future Tech Fund Xovian Aerospace, an Indian developer of AI-native RF satellite infrastructure, raised $2.5m in pre-seed money from Piper Serica and Turbostart. Nullspace, an American developer of simulation software for radiofrequency and quantum applications, raised a $2.5m seed round led by Fathom Fund. MaXon Systems, a Ukrainian developer of counter-drone technology aiming to protect Ukrainian cities from Shahed drones, raised $300k in pre-seed funding led by Freedom Fund. Pale Blue, a Japanese developer of water-based propulsion systems for satellites, raised an undisclosed amount from Mitsubishi Electric. CSG, a Czech defence prime, has apparently lined up BNP Paribas, Jefferies, JPMorgan, and Unicredit for a potential Dutch IPO that could fetch a $35bn valuation. Quantinuum, an American developer of quantum computers and software, is apparently considering raising money at a $10bn valuation.
NEW FUNDS Porsche and Deutsche Telekom are in talks to anchor a new €500m fund targeting European defence tech. Porsche's holding company has even dropped its restriction on not investing in weapons. Veteran Ventures, an American defence-focused investor that backs veteran-led companies, has closed a $60m Fund II. Forward Deployed, an American defence-focused investor, has closed a $45m Fund I. Norrsken Evolve, a Swedish climate investor, has apparently raised €57m to invest in resilience, although it won’t invest in weapons. Slightly old news now - Lakestar is apparently looking to raise a $300m (€166m) Europe-focused defence fund.
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