Watchtower Labs, a Bellevue, Wash.-based defense tech startup, emerged from stealth Wednesday with $35 million to build AI software that helps military planners make faster decisions about logistics and operations.

Shield Capital and Conviction co-led the seed round, with participation from Founders Fund and In-Q-Tel, the investment arm that supports the U.S. intelligence community. It’s the first outside funding for Watchtower, which was incubated inside Shield.

Watchtower was co-founded by CEO Akhil Iyer, a former Marine Corps infantry and special operations officer who said that like many veterans, he was frustrated that the technology on commercial iPhones wasn’t making it into the field with troops.

After leaving the military, Iyer worked on counter-drone technology and later invested in defense startups at Shield Capital, where he watched senior military leaders try to figure out how to put AI to practical use.

“One of those key problems is how do we best allocate scarce resources across the globe,” Iyer said. “Planning for that is really hard.”

Iyer’s Watchtower co-founders are CTO Souren Aghajanyan and head of engineering John Morman, longtime Microsoft engineering leaders who worked on large distributed systems and fraud protection. Iyer said his first call after deciding to build Watchtower went to Lou Manousos, who founded security company RiskIQ, sold it to Microsoft in 2021 and later became a corporate vice president there. Aghajanyan and Morman had worked on Manousos’ team, and they were already thinking about how simulation and AI could improve planning.

The company’s software lets planners ask questions in plain language, then runs simulations to map out possible scenarios and options, starting with military logistics: moving fuel, spare parts, munitions and people where they’re needed in time. Watchtower models hundreds of possible futures against real-world constraints and shows the assumptions and tradeoffs behind each option, while decision makers stay in charge of the final call.

Iyer said the platform pairs agentic AI with heavy-duty math.

“You can’t LLM your way to a really complicated math problem, yet at least,” he said. “It needs to be set up in the right way, and you need to do some real analysis behind it.”

Many existing military tools focus on giving commanders a clear picture of what they have right now and where it is, Iyer said. Fewer look ahead to what’s coming. Watchtower’s bet is that it can bridge AI and simulation and optimization software to do that.

Watchtower is starting with logistics, but Iyer said supply decisions are tied to operations, so the company plans to broaden its software into wider operational planning.

Watchtower has several military contracts, Iyer said. The most important is a prototype contract it won in January through the Defense Innovation Unit’s Joint Sustainment Decision Tool program, which is building AI tools to help the military forecast logistics needs weeks in advance.

Watchtower and Air Space Intelligence were picked after a competitive process, according to the DIU. The program’s partners include U.S. Indo-Pacific Command (the lead partner), U.S. Northern Command and the Defense Logistics Agency. The tools are meant to track and forecast critical supplies such as munitions, fuel, medical materiel and spare parts.

Iyer said the $35 million will go first toward building out the team, then toward delivering on the contracts Watchtower has won and expanding its platform beyond logistics. The startup has revenue but isn’t disclosing figures.

Watchtower has about 30 employees across offices in Bellevue, the Bay Area, Hawaii and the Washington, D.C., area, with more than a dozen in Bellevue. Iyer, who is based in San Francisco, said the company is moving to a larger Bellevue office and hopes to double its headcount. The Seattle area is a core focus for hiring, he said, because of its density of “very technical folks that maybe wanted to work on things with a little bit more mission impact.”

Recruits don’t need a military background, Iyer said. He noted that quite a few team members immigrated to the U.S. and see the work as a way to give back.

Watchtower is hiring for in-person roles in Bellevue that require U.S. citizenship, according to a LinkedIn post from Aghajanyan, including engineers for its simulation engine, distributed systems and machine learning work.

Watchtower joins a growing defense tech cluster in the Seattle area that includes:

• Overland AI, a University of Washington spinout that builds autonomous ground vehicles, raised $100 million this year and landed a Marine Corps production contract worth nearly $20 million.
• Shield AI picked Des Moines, Wash., to build its X-BAT autonomous fighter jet and expects 4,000 local workers by the early 2030s.
• Anduril has about 560 people in Bellevue and Seattle and sees a path to 1,000 engineers, though its expansion has drawn protests.
• Echodyne opened a $40 million drone-detection radar factory in Woodinville this summer.
• Exia Labs, led by former Army officer Jonathan Pan, is building AI software to speed up military planning and simulate missions.
• Microsoft and Amazon signed deals in May to put their AI systems on the Pentagon’s most classified networks.