NATO-Backed Startup Scaleout Systems Puts AI Targeting on Small Drones

A NATO-backed startup is deploying AI-driven target detection and selection small enough to run directly on drones for surveillance and attack missions. Scaleout Systems, founded in 2018 by researchers from Uppsala University in Sweden, has adapted its compact machine learning models for European militaries adopting AI and drones in modern warfare.

The pivot was driven by Russia's full-scale invasion of Ukraine in 2022. Scaleout originally built its technology to train and deploy machine learning models on the hardware available in commercial trucks and other vehicles. The war changed the company's calculus.

"With the war in Ukraine and a shifting world, we realized that this technology can be very important to operationalize edge data and sensor data for machine learning to make sure that NATO allies have found that strategic advantage," Andreas Hellander, cofounder and CEO of Scaleout Systems, told Ars.

The company's approach addresses a core constraint of drone warfare: small aircraft cannot carry the compute needed to run large AI models. By compressing models to run on edge hardware, Scaleout enables autonomous identification of battlefield targets without a constant link to ground stations or data centers — a capability of growing importance as electronic warfare routinely severs drone communications on the Ukrainian front.

The stakes extend beyond one battlefield. European militaries are adapting to AI and drones at speed, and target detection and selection that runs locally on cheap, small platforms could reshape how NATO allies conduct reconnaissance and strike missions. Scaleout's trajectory — from commercial vehicle machine learning in 2018 to NATO-backed defense work — mirrors the broader reallocation of European AI talent toward military applications since 2022.

Hellander's framing points to where the effort is headed: giving NATO allies a durable edge by processing sensor data at the edge itself, on the platforms that collect it.