Raleigh-based Diveplane’s recent $25 million funder introduced a new investor to the Triangle region – Silicon Valley-based Shield Capital.
Shield Capital led the round for Diveplane, which focuses on artificial intelligence.
Shield was founded by VC industry and national security veterans Raj Shah and Philip Bilden. It's known for investments such as Virginia-based HawkEye 360 and California’s Airspace Intelligence. It has some high profile support, with a National Security Advisory Board that includes people like former Secretary of Defense Ashton Carter and H.R. McMaster, a retired U.S. Army Lt. General who served as national security advisor.
The California firm launched an inaugural venture capital fund earlier this year, Shield Capital Fund I LP, which exceeded $120 million. Iit’s on the hunt for deep tech investments, particularly those with a national security bent.
In an interview, Raj Shah, managing partner at Shield Capital, talked about why they took a bet on Diveplane, and how other Triangle entrepreneurs might catch their eyes.
“We think that in this interconnected world … talent is flowing to a variety of geographies and we are always out there trying to find the best entrepreneurs trying to solve the most important problems,” he said.
Shield offers up a simple thesis: "Investing in Frontier Technologies that Matter."
The firm’s sweet spots are in AI, cybersecurity and autonomy.
Diveplane, which offers a black box of sorts that helps companies really understand their AI applications, checks multiple boxes. It offers AI-powered tools to help businesses and government bodies with ethical AI policies and data privacy strategies. The goal, Diveplane CEO Mike Capps has said, is to help people understand why AI decisions were made.
Diveplane’s partnerships with entities such as Duke University were also taken into account as Shield Capital analyzed the opportunity. As was the push for consumer privacy. Diveplane’s use of using synthetic data – one step removed from actual customers – is one point the firm honed in on as it was deciding to pull the trigger on the investment.
How to pitch Shield Capital
The company is routinely scouring for its next portfolio firm – putting the premium on entrepreneurs who really understand the problem their technology is trying to solve.
Shah said the team worries less about the pitch when it’s analyzing potential investments and more about that problem.
“What’s the problem? How are they going to solve it? And why is this the right team?” he said.
While the firm does take cold calls, a warm introduction is usually a startup’s best chance of success. That’s what happened with DIveplane. A mutual friend put the firms in touch. Over the next several months, the firms built a relationship, eventually closing the deal.
Capps said the $25 million fund will help the firm double its 18 person headcount this year.