Here's the biggest equity raise for desi defence startup

In possibly the largest equity raise by an Indian startup in the defence and aerospace sector, cutting-edge drone manufacturer Newspace Research & Technologies (NRT) has secured $52 million in a bridge round.

The company has raised a bridge round of $33 million of equity from marquee investors and secured debt facilities of $19 million from SBI’s startup hub and SIDBI, people aware of development told ET.

NRT, which is a leader in swarm drone technology and has running contracts with the ministry of defence, has got three new venture capitalists on board—Cornerstone Venture Partners, 360 ONE Asset and Volrado Venture Partners. It is learnt that more than 40% of the current investment has been made by existing investors.

In February 2022, ET had reported that the startup raised $21 million in its first round and aims to become a unicorn within five years. The funding has been raised at an undisclosed valuation.

In the past two years, NRT has delivered a world-class swarming system to the defence ministry and created a global record of the highest altitude flight for a multirotor system. It has also recently demonstrated a solar-powered 21-hour continuous UAV flight, a first of its kind for India. The company is currently in the process of delivering a tethered system to the Indian Army as well.

“I was impressed with the speed at which the leadership has built capabilities and the potential of some of the dual-use technologies being built, especially in communication and logistics,” said Ranjan Pai, chairman of Manipal Group, who has invested in the current round.

Beyond the Indian market, NRT has global ambitions and has already demonstrated swarm drone operations in Japan as a first response capability for disaster management and is looking to expand its portfolio in Japan, Middle East, Europe and the US.

“It’s not an easy path, but the timing for an Indian company to be amongst the top five in this industry transformation across the world couldn’t be better,” Julius Amrit, co-founder and COO of NRT, told ET.

The authorised representative of QRG investments, which has doubled down in the current round, reflected a common sentiment. “We have strong faith in the government’s indigenisation policies and in NRT’s technology team, which has displayed the potential to create disruptive capabilities for our defence services.”

The government’s Make in India initiative, changes in the Defence Acquisition Procedure (DAP) and schemes like the Innovation for Defence Excellence (iDEX) have given impetus to a defence and aerospace ecosystem that includes scores of startups and larger companies keen to tap into the long-term market.

“We are convinced that in the next 4-5 years, deep technologies coming out of defence startups will create a strong impact in businesses worldwide,” said Sridhar Rampalli, managing partner, Pavestone Technology Fund, a lead investor in the previous round.

It is a stated aim of the government to promote the rise of unicorns in the defence and aerospace sector. In the interim budget, the government announced a special scheme for deep tech in the defence sector.

Roy Walsh

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