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Defence startup NewSpace raises $21 million in funding

Source : The Economic Times

Defence startup NewSpace raises $21 million in funding
NewSpace Research & Technologies Limited (File Photo)

In what is possibly the largest venture capital funding into the defence sector, NewSpace Research & Technologies, a Bengaluru-based startup that specialises in drone technology has raised $21 million in a round led by Pavestone Technology Fund. The funding was raised at an undisclosed valuation. The startup aims to become a unicorn within the next five years.

NewSpace Research & Technologies, which has won at least two contracts from the defence ministry in the last year, specialises in swarm drone systems and is working on an ambitious project with Hindustan Aeronautics Limited (HAL) to develop a cutting edge pseudo satellite for surveillance and communications.

While big industry houses have diversified into the defence manufacturing business in the past few years and several startups have begun operations, VC funds have not found their way into the sector in large numbers yet, with investors behaving cautiously, given the long gestation period the sector has.

“Our belief is that the opportunity is large and the company is working on two, three products for the future. If done well, it could quickly be a unicorn in the next five or six years,” Sridhar Rampalli, Managing Partner of Pavestone Technology Fund said.

The funding raised is believed to be adequate for the next 18 months as the company starts delivering its products to the armed forces and future rounds are planned after that. Besides the defence market, the company will also focus on the civil logistic operations for drones and is delivering products as the market has just opened up.

On Feb 10, the company signed a design and development contract with the defence ministry to develop a High Altitude Pseudo Satellite (HAPS), which will be able to conduct surveillance operations and support communications by staying airborne for months at a stretch. Mentored under the ministry’s Innovations for Defence Excellence (iDEX) initiative, the program will see Hindustan Aeronautics Limited (HAL) as the lead prototype development partner.

In September last year, the Army had placed a Rs 200 crore order on the company to deliver a swarm drone system that will be capable of surveillance and attack missions. Processed under the emergency purchases route, the system has to be delivered by the manufacturer within a year.

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