Malaysian drone firm Aerodyne in talks to raise $100m Series C, may enter unicorn club

Photo by Aerodyne

Malaysia’s Aerodyne Group, which provides drone-based solutions for enterprises, is looking to raise up to $100 million in its Series C funding round as it gears up to launch its IPO, earliest by 2023.

The proposed funding could give the startup a unicorn status, thereby pegging its valuation at over $1 billion.

The company is currently in talks with a number of investors, including corporate venture capital firms and private equity investors, Aerodyne founder and CEO Kamarul A Mohamed told DealStreetAsia in an interview. The upcoming round could include a significant investment from a Middle Eastern conglomerate, he added.

Ever since its inception in 2014, Aerodyne has undertaken both organic and inorganic routes to expand its operations. For instance, it acquired a principal stake in Australia-based drone surveying and advanced asset inspection company Sensorem last November. Few months prior to that, it partnered with two local Kazakh companies to form Aerodyne Caspian LLP.

“We did a lot of global M&As over the past few years, which were meant to provide us with market access… although the pandemic has hampered our business in certain markets, we think we should be able to achieve our targeted timeline to launch the IPO,” Aerodyne founder and CEO Kamarul A Mohamed told DealStreetAsia in an interview.

Apart from Malaysia, the company is also present in markets such as Japan, Australia, India and Indonesia.

Aerodyne is currently in the process of deciding where it wants to launch its IPO. Kamarul indicated that while the company is supportive of the local bourse, it may stand to gain better in terms of valuation in the US, Japan or other markets.

Aerodyne made headlines recently when it raised an undisclosed amount in its Series B+ round, which saw the participation of a consortium of Japanese investors comprising Real Tech Fund, Kobashi Holdings, and ACSL. Prior to that, the company raised $30 million led by InterVest and Kejora Ventures.

Aerodyne is also backed by North Summit Capital, Arc Ventures, Leave a Nest, Axiata Digital Innovation Fund, 500 Startups, Gobi Ventures and ventureTECH, among others.

As the company carves out its IPO plans, investors indicated their expectations from the company, highlighting its expansion plans and measures to launch new solutions.

Leave a Nest group founder Yukihiro Maru told us that Aerodyne’s efforts to collaborate with other companies will help it solidify its market expansion in Japan.

While the COVID-19 pandemic has affected Aerodyne’s IPO goalpost, Kamarul said taking the company public by 2023 or the following year should still be achievable. “We have created two new engines of growth that are showing amazing traction – Agrimor and Fulcrum – and we expect those to provide us with a revenue pipeline of $500 million by the next three years.”

Meanwhile, North Summit Capital VP of investment Botian Xiao said: “It is expected for Aerodyne, as a globally leading AI-powered drone service provider, to be one of the first-tier sector players filing for IPO in the next few years.”

Malaysia’s Minister of Science, Technology and Innovation Khairy Jamaluddin during a parliamentary debate last year had said that the ministry aims to list Aerodyne outside Malaysia, in markets such as the US’s Nasdaq. ventureTECH, which has investments in Aerodyne, is a wholly-owned subsidiary of Malaysian Industry-Government Group for High Technology (MIGHT).

Aerodyne, which uses AI as an enabling technology for large-scale data operations, analytics and process optimisation, claims to manage over 350,000 infrastructure assets globally, with over 110,000 flight operations. It is understood to have surveyed over 120,000 km of power infrastructure across 35 countries globally.

New verticals for growth 

Aerodyne is increasingly undertaking measures to give a much-needed facelift to the nascent drone sector in Southeast Asia.

Early last year, the company had deployed about 50 of its staff members to a CSR project with the Malaysian government, assisting the police force to operate drones for surveillance amidst the lockdown months during the peak of the pandemic. 

“Out of the 90 drones flying around the country operating at that time, 60 came from Aerodyne. Initially, it was just a provision of service. But then we began to understand the problem, which led to us develop a new solution dubbed Fulcrum.”

The nested swarm intelligence system is currently being tested in the Middle East and other Southeast Asian nations, besides its home market, Malaysia.

Another new product Aerodyne has developed is Argimor, an on-demand drone precision agriculture solution that aims to increase yield and reduce the reliance on foreign labour. The product is now being exported to Indonesia and India.

Currently, Malaysia is still Aerodyne’s biggest market, followed by Australia, India, and Indonesia. The last two, however, could be Aerodyne’s biggest markets in the future, besides China, said Kamarul. “While we do have Aerodyne China, I wish we could do better there. We realise that there is a significant opportunity for us there, but we are still trying to figure out how to penetrate the market.”

Growing competition

The unmanned aerial vehicle (UAV) market has seen significant growth over the past few years. A report released by Research Dive in April revealed that the market is expected to touch a marketsize of $55 billion by 2027, growing at a CAGR of 19.9% from 2020 to 2027. Market drivers include the implementation of AI in drone systems for various industries.

Aerodyne was ranked second in the world by Drone Industry Insights in its Drone Service Provider Ranking 2020 in the “Remote Sensing Drone Service Providers” category, behind Tokyo-headquartered Terra Drone Corp that raised 1.5 billion yen in Series A round earlier this year. The company serves multiple enterprise verticals, including oil and gas, construction and mining.

Among other prominent players, Aerodyne is Scotland-based Cyberhawk, which has been operating since 2008. The company was acquired by funds advised by Magnesium Capital LLP in April 2019 at an undisclosed amount.

While Kamarul acknowledged that there is growing competition in the global market, the one in Southeast Asia is still at a nascent stage.

To ramp up its presence globally, Aerodyne is currently focusing on strengthening its technology base and leadership.

Future deals and collaborations that Aerodyne is looking at are the ones that could help the company build its new engines of growth. It is seeking to develop more disruptive new solutions, similar to what it has so far introduced with Fulcrum and Agrimor.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.