Recent media coverage indicates that South Korea’s leading defense companies have accumulated order backlogs totaling around $69 billion by the end of 2024. The country is ramping up its investments in cutting-edge military technology and strengthening its defense partnerships, especially with European nations. Following the establishment of the EU–South Korea Security and Defence Partnership in 2024 and a surge in exports of military vehicles and artillery, South Korea has now become the second-largest supplier of arms to NATO countries in Europe.
Despite this significant industrial presence, there are surprisingly few startups emerging to rival or disrupt the established players. The defense technology startup ecosystem in South Korea remains in its early stages, highlighting a notable disconnect between the nation’s robust manufacturing capabilities and its limited early-stage innovation.
Bone AI, a startup with bases in Seoul and Palo Alto, California, was founded earlier this year with the bold vision of creating a comprehensive AI platform that seamlessly integrates software, hardware, and manufacturing processes.
The company specializes in developing advanced autonomous vehicles for air (UAVs), land (UGVs), and sea (USVs), primarily serving defense and government sectors with a focus on B2G contracts. While Bone AI’s long-term goal is to operate across all three domains, it is initially concentrating on defense-oriented aerial drones, which are engineered to optimize tasks such as logistics, wildfire monitoring, and counter-drone operations.
Founded by DK Lee, who also co-founded MarqVision, Bone AI has secured a $12 million seed investment led by Third Prime, with Kolon Group—a South Korean conglomerate known for its expertise in advanced materials and manufacturing—also participating. According to Lee in an exclusive interview with TechCrunch, Kolon is a perfect strategic ally for Bone AI, given its involvement in AI, robotics, and next-generation manufacturing.
Lee shared that the company is already generating revenue, having secured a seven-figure B2G deal and earning $3 million in its first year. Additionally, Bone AI was chosen as a winner in a government-supported logistics initiative in South Korea, which will utilize its autonomous UAVs and UGVs.
When questioned about how such a young company has already landed contracts and started generating income, Lee explained to TechCrunch that Bone AI acquired D-Makers, a South Korean drone firm, along with its intellectual property, just half a year after launching. Initially focused on AI models for robotics, Bone AI is now merging its AI division with the newly acquired company, and Lee hinted at further acquisitions in the future.
Lee personally invested over 10% of the seed round—about $1.5 million—into the company. “It was important for me to demonstrate to both investors and my team that I am fully committed to this mission, both financially and emotionally,” he told TechCrunch.
Bone AI is Lee’s second startup. His previous experience co-founding MarqVision gave him valuable knowledge about developing and scaling AI products globally, but also convinced him that the next evolution of AI would extend beyond the digital realm into the physical world.
“After leaving MarqVision, I essentially started from scratch—attending robotics conferences like IEEE ICRA, reaching out cold to engineers behind Google RT-1 / RT-2, and even introducing myself to Jim Keller, CEO of tenstorrent, at a cafe just to arrange a coffee meeting,” Lee recounted.
Lee emphasized that Bone AI should not be seen solely as a defense technology company. With broader goals in mind, he describes it as a “physical AI” enterprise, uniting advanced AI simulation, autonomy software, embedded engineering, hardware development, and large-scale manufacturing within a single organization.
While building his second venture, Lee noticed that progress in AI and hardware was happening in isolation.
“There was a lack of integration—the industrial infrastructure needed for intelligent machines to scale simply wasn’t being built. Even Nvidia, the world’s most valuable AI company, depends on a vast network of manufacturing partners across Asia and Europe,” he explained to TechCrunch.
Lee highlighted South Korea’s history of producing global hardware leaders like Hyundai, Samsung, and LG. “This is why we should expect to see more drone and robotics startups here, and why Korea is well-positioned to support them,” he said. “Bone’s mission is to establish the supply chain for Physical AI in South Korea, and then extend that capability to the U.S., Europe, and allied nations.”
In the U.S., Anduril has become a widely recognized name with a valuation exceeding $30 billion, while Europe’s Helsing recently raised funds at a valuation of about $13 billion. Even in smaller markets like Israel, companies such as Kela Technologies have gained similar prominence.
Asia, however, has yet to reach this level of adoption, according to Michael Kim, general partner at Third Prime. “As countries worldwide prioritize reindustrialization—not just the U.S.—Bone is positioned at the crossroads of sovereign AI, multipolarity, and reindustrialization,” he told TechCrunch, emphasizing both the company’s vision and the challenges it addresses.
South Korea boasts world-class, competitively priced hardware manufacturing across industries such as heavy machinery, shipbuilding, automotive, and semiconductors.
“There are many specialized hardware firms here that haven’t attracted Bay Area venture capital; Bone’s robust ‘buy versus build’ approach aims to acquire and integrate these assets, speeding up product development and market traction,” Kim noted.
