Deal focus: Indian drone maker takes flight

When India’s SphitiCap launched its debut fund last October, it wasn’t shy about going large with a target of USD 500m. Initial expectations of a first close within 2022 didn’t pan out, but hard commitments have now been secured for a USD 180m first close expected no later than June.

The firm was set up last year by Pallav Singh and Mayank Mehra, who each have more than 10 years’ experience as investors and start-up advisors. The new fund will back around 100 start-ups, with up to USD 150m reserved for follow-on rounds.

“Beginning with a small fund was one option, but we chose to go with an ambitious fund just to make sure we can do what we want to do. We didn’t want to be limited by a lack of funds,” Mehra said. “We have been following a few start-ups for quite some time, and in order to help them the way we want to, we need a fund of this size at least.”

Garuda Aerospace is clearly one such company. Singh and Mehra have been eyeing the industrial drone maker and services provider since before SphitiCap was hatched. Mehra describes the company as mature even at the Series A stage, profitable, and having already begun its growth story in earnest.

SphitiCap has led a USD 22m round for Garuda, providing USD 12m. The balance came from a mix of local and international investors, including at least two institutional players. The round values the company at USD 225m.

“We’ve been following a couple of drone start-ups, but the way these guys have grown is really inspiring,” Mehra said. “The growth is simply driven by the way the team is operating and innovating. The use-cases are a really good addition to the actual value of the drones themselves. The technology is at a premium level.”

Garuda sells about 30 different types of drones for industrial applications across agriculture, energy, logistics, and consumer services, among other categories. It also operates as a service provider with a fleet of about 400 drones with various capabilities. There are some 500 full-time pilots on the payroll and plans to add more.

India is the primary market, but there have been important forays into Singapore, Malaysia, the US, the United Arab Emirates, and Panama. The latest funding will be used to double down on the domestic market and develop technology such as autonomous piloting systems.

Applications span farm surveying, event photography, reconnaissance, surveillance, infrastructure inspection, and disaster management. The latter use-case was most recently demonstrated in earthquake rescue efforts in Turkey.

Founder and CEO Agnishwar Jayaprakash told local media that there are plans to go deeper in the defence sector; Garuda already works with the Indian military’s R&D unit on anti-drone lasers. Mehra downplayed this as a near-term growth area but indicated that such a development would not necessarily impair the company’s attractiveness to investors.

Revenue is said to be on track to rise from INR 153.1m (USD 1.8m) in the 2022 financial year to INR 400m in 2023. Jayaprakash hopes revenue will reach as much as INR 10bn in 2024 as global exports ramp up. At that point, the company plans to start an IPO process.

SphitiCap expects this growth plan to play into its thesis of serving India’s underserved and lower-income mass market through investments in lower-tier cities. Garuda is headquartered in Chennai, but with clients such as Swiggy, Flipkart, and Delhivery, there is scope to play a key role in last-mile logistics for less-connected consumer markets.

“We think it’s possible to generate a lot of revenue and help a lot of lives by deploying in tier-two and tier-three cities,” Mehra said. “It can be a game changer for deliveries and much more.”

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• Topics
• South Asia
• Industrials
• Technology
• Early-stage
• India
• SphitiCap
• Agriculture
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