Watchtower Labs Raises $35m for Military AI Planning

A military operation can stand or fall on fuel, spare parts and the time it takes to move them. Watchtower Labs, a Seattle start-up that came out of stealth on 21 October, is betting that AI can help planners see those problems coming.

The company said it has raised $35m in seed funding led by Shield Capital and Conviction, with Founders Fund also investing. It is starting with logistics planning: transport, spare parts, fuel, munitions, routes and time. The deal adds to the rounds tracked on TSN’s AI Funding Rounds and Valuations hub.

The Defense Innovation Unit picked it in January

Watchtower is not arriving without a government customer. The Defense Innovation Unit (DIU) says it awarded prototype contracts to Watchtower Labs and Air Space Intelligence in January 2026 under its Joint Sustainment Decision Tool programme, after a competitive commercial solicitation. ASI raised $325m at a $3bn valuation on Tuesday.

DIU launched the programme in August 2025 with US Indo-Pacific Command, US Northern Command, the Defense Logistics Agency and US Army Europe and Africa. It wants tools that forecast needs for munitions, fuel, medical supplies and spare parts, generate realistic courses of action for commanders in contested environments, and let users run what-if analysis. A third vendor, Gallatin, won a contract in June. Neither DIU nor Watchtower has given the value of the award.

According to the company, its software models hundreds of possible futures against real-world operational constraints, generates options that can actually be carried out, and shows the assumptions and trade-offs behind each one. Planners can ask questions in plain language, while decision makers stay in control. Watchtower says it worked with the Naval Postgraduate School in 2025 to shape the system. “These conditions can change faster than traditional planning processes can keep pace, forcing staff to continually reassess plans under increasing time pressure,” said Akhil Iyer, co-founder and chief executive.

Its lead investor also chairs the board

The ties to Shield Capital run deep. Raj Shah, Shield’s founder and managing partner, is also Watchtower’s chairman. The company was incubated inside Shield, and Iyer, a former Marine special operations officer, was a Shield Capital investor before co-founding it with Souren Aghajanyan and John Morman, whom the release describes as seasoned Microsoft engineering leaders. Shah framed the bet in broad terms: “An entire generation of companies is being built from scratch on what AI can now do, against the most challenging geopolitical environment in decades.”

The other lead investor was blunter. “Logistics is the backbone of our military’s power, and yet we’re stuck in the Stone Age,” said Sarah Guo, founder of Conviction, whose portfolio, by its own account, includes Cognition, Harvey and Sierra.

Watchtower says the money will pay for hiring, more applications on its core platform and further testing and deployment. It also plans to extend the technology beyond sustainment into broader operational planning. For now, the only government work it has disclosed is a prototype for a programme whose lead mission partner, according to DIU, is US Indo-Pacific Command.