SAN FRANCISCO, California: A veteran-led startup that's rethinking how submarines gather intelligence just secured its first round of external funding.

Spear AI, founded by former U.S. Navy officers, has raised US$2.3 million to develop AI tools that can make sense of passive acoustic data, sounds collected underwater by submarines and sensor networks. The Washington-based startup aims to help operators distinguish whether that sound is a harmless rain squall, a passing whale, or a potentially hostile vessel, and to pinpoint its location and speed.

The early-stage funding comes from Cortical Ventures, an AI-focused venture capital firm, and private equity firm Scare the Bear. CEO Michael Hunter, a former analyst supporting Navy SEALs and Joint Special Operations Command, said the capital will help the company double its 40-person team to support both government and commercial clients.

Unlike most AI systems trained on labeled images or text, underwater acoustic data lacks extensive, well-structured datasets. Spear AI is trying to close that gap by building a hardware-and-software platform that organizes such data so AI algorithms can use it.

The startup sells sensors that can be attached to buoys or vessels to collect acoustic signals, along with software tools that help sort, label, and prepare the data for analysis. The U.S. Navy recently awarded Spear AI a $6 million contract for its labeling tool, underscoring the demand for more advanced data processing solutions in defense.

The long-term goal is to achieve a real-time AI-driven analysis of underwater environments, a critical edge in both military and commercial maritime operations.

Hunter co-founded the company in 2021 with John McGunnigle, a former U.S. Navy nuclear submarine commander. The pair bootstrapped Spear AI until now, prioritizing development over early contracts. "We wanted to build the product and actually get it out the door before the contract came in," Hunter said. "The only way you can do that is with private capital."