South Korea’s major defense giants have amassed about $69 billion in backlogs through the end of 2024. according to media reports. Seoul is also accelerating investment in advanced weapons systems and expanding its defense ties, particularly with Europe. With the new EU-South Korea security and defense partnership in 2024; and increasing vehicle and artillery exports, the country has become the second largest arms supplier to the European members of NATO.
Yet despite the massive industrial footprint, remarkably few startups have emerged to match or challenge the incumbents. The country’s defense tech startup scene is still nascent, revealing a wide gap between Korea’s manufacturing power and its early-stage innovation.
Bone AIa new startup based in Seoul and Palo Alto, California, launched earlier this year with an ambitious plan to create a fully integrated AI platform that connects software, hardware and manufacturing.
The company develops next-generation autonomous aerial (UAV), land-based (UGV) and underwater (USV) vehicles for defense and government customers, with a heavy focus on B2G contracts. While it eventually aims to operate all three types of systems, Bone is starting with defense-focused aerial drones designed to streamline missions such as logistics support, fire detection and anti-drone defense.
The company, founded by DK Lee (who also co-founded MarqVision), raised a $12 million seed round led by Third Prime with participation from Kolon Group, a South Korean strategic investor specializing in advanced materials and manufacturing development. Kolon is an ideal strategic partner for Bone, which is active in artificial intelligence, robotics and next-generation manufacturing, Lee said in an exclusive interview with TechCrunch.
The startup is already generating revenue, landing a seven-figure B2G contract and raising $3 million in its first year, Lee noted. In addition, Bone was selected as a winner in an end-to-end logistics program supported by the South Korean government, which will develop UAVs and UGVs powered by its autonomy stack.
When asked how a company less than a year old is already securing contracts and generating revenue, Lee told TechCrunch that Bone acquired a South Korean drone company called D-Makersand its intellectual property (IP), just six months after launch. Initially focused on AI models for robotics, Bone is now integrating its existing AI division with the newly acquired company, and more acquisitions are on the horizon, he added.
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Lee personally committed more than 10% of the round, about $1.5 million, he told TechCrunch. “This was important to me because I wanted to show both the investors and my team that I am fully invested, financially and emotionally, in this mission,” he said.
Bone is Lee’s second venture. His experience co-founding MarqVision gave him first-hand insight into building and scaling AI products globally, but also convinced him that the next frontier of AI is not just digital. it is physical.
“After leaving MarqVision, I basically started from scratch — going to robotics conferences like IEEE ICRAby cold emailing the engineers behind Google RT-1/RT-2and even walking up to Jim Keller, CEO of Tenstorrent, at a coffee shop to introduce myself and get a coffee later,” Lee said.
Bone AI should not be seen as just a defense technology company, the founder continued. With broader ambitions, Lee describes it as a “natural AI” company, combining advanced AI simulation, autonomous algorithms, embedded engineering, hardware design and large-scale manufacturing under one roof.
While preparing his second company, Lee noticed that AI and hardware were moving in silos.
“No one was building the connective tissue, the industrial backbone that allows intelligent machines to exist at scale. Even Nvidia, the most valuable AI company today, relies on a huge ecosystem of manufacturing and manufacturing partners across Asia and Europe,” he told TechCrunch.
Lee points to South Korea’s track record of manufacturing global electronics companies such as Hyundai, Samsung and LG. “This is why we should see more drone and small robotics companies emerging here, and why Korea is fully capable of supporting them,” the CEO said. “Our mission at Bone is to build the supply chain for physical AI in South Korea and then expand that capability to the US, Europe and other allied countries.”
Anduril has become a household name in the US, with a valuation of $30 billion, while in Europe, Helsing last raised funding at around $13 billion. Even in smaller markets like Israel, companies like Kela Technologies have achieved similar recognition.
Asia has yet to see the same level of adoption, Michael Kim, general partner at Third Prime, told TechCrunch. “As economies around the world focus on reindustrialization, not just in the U.S., Bone sits at the intersection of mainstream AI, multipolarity and reindustrialization,” he said, highlighting both the company’s mission and the problem it aims to solve.
South Korea has high-quality, cost-competitive hardware manufacturing in many sectors such as heavy industry, shipbuilding, automotive and semiconductors.
“There are a lot of niche hardware players, but they haven’t gotten Bay Area VC funding. Bone has a strong buy-versus-build strategy to acquire and integrate these assets, accelerating product maturity and commercial traction,” said Kim.
