Airlogix, a Kyiv, Ukraine-based startup that builds strike and reconnaissance drones, is in talks to raise a fresh round of $100 million at over a $2 billion valuation, according to two sources familiar with the matter. The round follows an April German government contract for Airlogixl to build 5,000 drones for Ukraine’s armed forces.

If it closes, the deal would make Airlogix the most valuable startup to emerge from the ecosystem of companies that sprang up to supply Ukraine’s armed forces after Russia’s 2022 invasion.

Airlogix was founded by Vitalii Kolesnichenko in 2020 to design and manufacture unmanned cargo drones. But after Russia’s invasion of Ukraine in 2022, the startup switched to building propeller-driven drones that could collect information on enemy movements, loitering over targets for up to four hours to feed intelligence back to Ukrainian troops.

The company announced in April that it would build medium-range and battlefield drones designed to hit strategic targets, troops, and light armored vehicles. That deal was struck in partnership with Swiss startup Auterion, which builds an AI operating system to control and coordinate drones and raised $130 million at an undisclosed valuation last September.

The vast majority of Ukraine’s drones are now made domestically. But Russia’s exapnding attacks with ballistic missiles and a new generation of jet-powered drones has threatened production facilities. The drones produced as part of the Auterion partnership will be built in Germany and shipped back to Ukraine. In May, Airlogix also announced a deal to build drones in Canada with an Ontario-based drone builder Sentinel Research and Development.

“We experienced a couple of times destroyed locations, and we basically were forced to break down our manufacturing cycles [into] many, many small pieces,” said Airlogix CEO Vitalii Kolesnichenko, speaking at the Resilience defense conference in London this week.

Kolesnichenko said he was working to strike similar production deals in Finland, Denmark, The Netherlands and the United States. “No matter how successful you are, no matter how good you are right now, a lot of investors… [fear] that everything [is] concentrated in Ukraine,” said Kolesnichenko.

Airlogix declined to comment on its fund raising.

Forbes reported in March that U.K.-based startup Uforce had raised a $50 million seed round at a valuation of over $1 billion with a plan to take proven Ukrainian military technology, like the Magura drone boats, and manufacture it outside the country. Bloomberg reported in September that the drone builder was in talks to raise at a $5 billion valuation.

Some homegrown Ukrainian defense companies may be worth more than Airlogix, but have not been reported to have raised capital from external investors. Ukraine’s Pravda newspaper reported in May that Fire Point, which builds ‘Flamingo’ cruise missiles for the country, made over $669 million last year.

Western defense startups and investors have become frequent visitors to Ukraine’s capital since the start of the war. Ukraine has become a live testbed for modern warfare, where electronic attacks, quadcopters and now long-range drone strikes have remade the battlefield and pushed attacks deep into both Ukraine and Russia.

Despite Ukraine’s edge, its startups were banned from selling drones abroad as part of an arms export ban that was imposed by Ukraine’s government in February 2022. A new law passed in July opens the door to export deals while Ukraine’s government itself has signed several agreements with NATO nations like Estonia, the Netherlands and Middle East nations to supply them with drones.