Billionaire Thomas Tull likes to say he realized the potential of artificial intelligence long before ChatGPT helped students write term papers.

Tull cemented his fortune five years ago by selling a film company that produced blockbuster hits like The Dark Knight and The Hangover. He’s now focused on investing in AI startups that will give the U.S. a technological edge over China and looking to raise as much as $5 billion for a fund to back defense-focused firms. One that he’s already taken a stake in enables drone swarms to operate autonomously.

A serial entrepreneur who has a minority stake in the NFL’s Pittsburgh Steelers and a 4,000-acre ranch in Idaho once owned by Microsoft Corp. co-founder Paul Allen, Tull has a net worth of about $3 billion, according to the Bloomberg Billionaires Index. But he says his interest was always in the revolutionary technologies of AI, machine learning and big data.

“This decade, it’s going to permeate every aspect of life," said Tull, 52, a visiting innovation scholar and dean’s advisory board member at Massachusetts Institute of Technology’s school of engineering. “For those that are unprepared for it, whether in business or defense, it has incredibly far-reaching implications.”

For years, wealthy investors and venture capitalists shunned defense startups because they didn't want to finance military aggression or invasive surveillance. That reluctance has waned as tensions with China and Russia grow.

Defense startups have thrived in an otherwise gloomy period for tech fundraising, which is now being exacerbated by the collapse of Silicon Valley Bank (Tull has no direct exposure to the bank, a spokesperson said). Defense-tech firms haven’t experienced a down-round of funding in the four years through 2022, according to data from Preqin. A record 29 early-stage tech funds included “defense” in their mission statement last year, up from two in 2012.

Tull’s U.S. Innovative Technology Fund has already picked up stakes in several defense-focused startups. They include a satellite company that can capture images at night or through cloud cover and Anduril, the defense contractor founded by fellow billionaire Palmer Luckey. A U.S. Securities and Exchange Commission filing in January showed the fund had raised more than $1.4 billion.

Tull declined to comment on the fund or his fundraising.

Washington’s “posture” has changed, especially when it comes to industries such as aerospace and semiconductors, which the Biden administration has vowed to support through the Chips and Science Act, Tull said.

“There’s a recognition that to do nothing can’t be the strategy,” he said. “There are lessons that can be gleaned from this incredibly sad and unfortunate situation in Ukraine for the way that power is going to be projected, and what it’s going to mean to have your military be not only formidable but be able to defends itself and our allies.”

Tech giants, venture capitalists and billionaire investors are among those cozying up to the defense sector.

Alphabet Inc.’s Google is getting Pentagon cloud contracts just four years after thousands of its employees protested the use of AI to analyze drone-surveillance footage. Venture capital giant Andreessen Horowitz is seeking investments to support the national interest through its American Dynamism program, while Elon Musk gave the most visible display of “dual use” technology when his Starlink satellite business began providing internet service to Ukraine forces.

Former Google Chief Executive Officer Eric Schmidt has invested in some of the same firms as Tull, including quantum computing and AI startup Sandbox AQ. Along with Peter Thiel, they also seeded America’s Frontier Fund, a nonprofit venture vehicle that aims to support U.S. strategic interests in advanced technologies. 

Tull wasn't always all-in on defense tech. Raised by a single mother in Endwell, New York, he played football at Hamilton College, which he attended on scholarship. After graduating in 1992, he worked as a part-time baseball scout and owned small businesses including a coin-operated laundromat, which offered a lesson him how dynamic pricing could maximize revenues at peak hours.

Tull first saw the possibilities of disruption in Hollywood while working for a tech startup fund created by WebMD founder Jeff Arnold that focused on entertainment investments.

In 2004, Tull founded Legendary Entertainment, which went on to produce such films as Godzilla, Inception and Jurassic World. He hired Matthew Marolda, who had run an analytics consultancy for pro sports teams, and soon other Hollywood studios began reaching out for help with applied analytics. Tull sold to Beijing-based Wanda Cultural Industry Group for $3.5 billion in 2017—the biggest acquisition of a U.S. media firm by a Chinese company at the time.

Despite his success in the film industry, Tull said becoming a Hollywood insider was never his main ambition.  

One of his biggest bets came in 2020, when he sold his AI and technology operation to Acrisure, a Michigan-based fintech, in exchange for stock. The company’s revenue has since surged to more than $3 billion, putting it among the top 10 national insurance brokers. The  Steelers recently rebranded its stadium—known for decades as Heinz Field—with the firm’s name.

The situation in China has shifted quickly since he sold his film company, with the government’s crackdown on tech tycoons and years of crushing Covid-zero policy, Tull said. 

“You have a very powerful autocrat running the place and putting fingerprints all over everything,” he said. “Having some of our best and brightest men and women from the tech sector helping us to think about these things and navigate them, I think it’s part of our duty.”

This article was provided by Bloomberg News.