NATO-backed Scaleout Systems Deploys AI Target Detection on Drones

Swedish startup Scaleout Systems is helping NATO deploy an AI-powered target detection and screening system that can run directly on small drones for reconnaissance and strike missions. Founded in 2018 by researchers from Uppsala University in Sweden, the company shifted from commercial vehicles to defense after the Russia-Ukraine war began in 2022.

Scaleout uses lightweight models instead of frontier large models from OpenAI or Anthropic, allowing machine learning models to perform computer vision tasks directly on drone hardware or frontline base computers. In 2025, the company was selected for NATO's DIANA challenge program, launching the Federated Aerial Intelligence for Recon project.

The system uses a federated learning architecture where edge devices can independently run AI inference and active learning, then sync updated models back to central nodes once communications are restored. Hellander said the architecture could eventually enable collaboration across NATO member states. The company is also involved in the ALMA project led by BAE Systems Bofors in Sweden, developing low-cost autonomous loitering munitions.