Echodyne CEO Eben Frankenberg, right, leads Sen. Maria Cantwell, left, U.S. Rep. Suzan DelBene, behind her, and others on a tour of the company’s new radar factory in Woodinville, Wash., in July. Shield AI agreed to acquire Echodyne in a deal valued at up to $5.3 billion. (Echodyne Photo)
Shield AI, the defense tech company planning to build its AI-piloted X-BAT fighter jet south of Seattle, agreed to acquire Kirkland, Wash.-based Echodyne, which makes compact radar systems that detect and track drones, in a transaction valued at up to $5.3 billion.
It’s a major exit for one of the Seattle region’s best-known deep-tech startups. Echodyne spun out of Intellectual Ventures, the Bellevue invention lab, in 2014 with a $15 million round led by Bill Gates and Madrona.
Echodyne, ranked No. 9 on the GeekWire 200 , has raised about $200 million in total, and PitchBook put its valuation at $485 million after its last priced round in 2022.
The deal is believed to be the second-largest acquisition of a private venture-backed company in Washington state history, behind Okta’s $6.5 billion acquisition of Auth0 in 2021, Madrona’s Tim Porter wrote in a blog post . It’s among the top exits in the history of the Seattle-based venture firm, Porter said, noting that Echodyne is profitable.
To help pay for the acquisition, San Diego-based Shield said it’s raising $2.5 billion, including $1 billion in new funding at a $28.8 billion valuation. That’s more than double the $12.7 billion valuation it reached in March .
What Echodyne does: Echodyne’s radar is built into hundreds of counter-drone and security systems used in more than 40 countries, according to the companies. It’s used in remote weapon stations, high-energy lasers and microwave weapons, and it helps point interceptors at incoming drones.
Stadiums and airports use the same technology to spot drones that aren’t supposed to be there. Shield, best known for its Hivemind autonomy software and V-BAT drone, has served only government end users so far, CEO Gary Steele told Bloomberg .
Steele called Echodyne the company’s first step into hardware with civilian as well as military uses. “Think about public safety — whether it’s the Super Bowl or FIFA, just literally every single thing is going to need protection from drones,” he said.
Impact on jobs: Echodyne has about 400 employees, up from 260 when it opened a $40 million manufacturing facility in Woodinville, Wash., in July. No layoffs are planned, and Echodyne employees won’t be required to relocate, a Shield spokesperson said.
The combined company will have about 2,700 employees. Eben Frankenberg, Echodyne’s co-founder and CEO, will remain in that role, reporting directly to Steele, and will stay in charge of its products and manufacturing as well as its relationships with customers and partners.
Madrona invested $5.5 million in Echodyne’s initial $15 million round, at a $24 million pre-money valuation, and Porter joined the board. Madrona and other Echodyne investors will become significant Shield shareholders, and Porter will serve as a board observer at Shield, according to the venture firm.
Echodyne makes all of its radar systems in the Seattle region, and Shield will continue to double down on that growth along with its investment in X-BAT manufacturing, Porter said via email.
“Seattle as a defense tech hub is real,” he said.
The deal is Shield’s fifth acquisition and its largest. The others were Heron Systems and Martin UAV in 2021, Sentient Vision Systems in 2024 and Aechelon Technology in June.
The acquisition is expected to close in early 2027, pending regulatory approvals. Shield will pay $4.8 billion at closing, with up to $500 million more if Echodyne hits performance targets, and the $2.5 billion financing won’t go through if the deal falls apart, according to the companies.
Dartmouth and Onyx roots: Frankenberg has “a unique knack for getting brilliant people to believe in a vision, even when there’s plenty of skepticism around them,” said Brent Frei, the Smartsheet co-founder, who met Frankenberg as a freshman at Dartmouth and later roomed with him.
“We were a little bit like the Odd Couple; he was the consummate gentleman from North Carolina: well-mannered, organized, focused and very smart,” Frei said. “By contrast, I was the other character.”
Frei founded Onyx Software in 1994 and built it largely with a group of Dartmouth friends, including Frankenberg. Mark Mader, another of the group, later built Smartsheet with Frei, and Rob Eleveld went on to sell Ekata to Mastercard for more than $800 million.
“Our running joke is that we keep building 10-to-12-year overnight successes,” Frei said.
Matt McIlwain, a Madrona managing director who also goes back to Dartmouth with Frankenberg, called the Onyx “family tree” a “great example of how the innovation ecosystem and flywheel gets built over decades in a community like Seattle.”
