Emesent, a drone tech startup spun out of CSIRO, has raised $25 million in a round that includes NGS Super, Hostplus, Main Sequence and the NRF.
CSIRO-spinout Emesent has raised $25 million in fresh funding, including $10 million in venture debt from the National Reconstruction Fund, as it aims to jump further into the exploding defence tech industry.
The company has historically made sensors that attach to drones and, with the help of AI and 3D mapping smarts, survey areas without the need for GPS. That has won it big mining customers like BHP and Rio Tinto, but the company has spied an opportunity to expand further on the battlefield.
“Construction and mining have become our two primary use cases, but the other big development that’s happened [since our 2022 Series A] is our ability to enter into defence, specifically with reconnaissance,” Emesent CFO David Nucifora told Forbes Australia. “We’ve got to increase capacity at our plants to meet demand, as well as the growth in defence.”
Emesent raised a $32 million Series A in 2022, with backing from tech investing titan Tiger Global and Sydney’s Perennial Partners. This $25 million raise is not a Series B, with Nucifora saying it was raised to meet “short term” goals related to its autonomous AI and 3D mapping platforms as well as boost manufacturing at its Wacol, Queensland plant.
Nucifora declined to comment on the startup’s valuation.
Superannuation funds Hostplus and NGS Super participated in the equity round, joining the Queensland government via QIC Ventures, Main Sequence and New York’s Orion Resource Partners.
Defence has been among the hottest segments of tech in the years since the Russian-Ukraine War began, led by US military software maker Palantir (up over 1,200 per cent since February 2022) and Palmer Luckey’s Anduril (now valued at US$61 billion, up from US$4.6 billion in June 2021). Two of the three startups that have reached unicorn status this year – Advanced Navigation and Gilmour Space Technologies – have had defence applications.
Emesent has customers in Australia, the US and Europe. This capital raise will add 20 roles to the existing team of 109.
The NRF is a $15 billion Australian Government fund which seeks to stimulate advanced manufacturing in the country and bolster sovereign capability. The deal is notable for being the NRF’s first foray into venture debt, which provides funding to startups without founders having to dilute existing shareholdings.
Venture debt is offered by a few firms in Australia, like Mighty Partners and Rixon Capital, but is far less common here than in the the United States where an estimated US$68 billion was issued last year.
“Part of the NRF’s role is to fill gaps in the market, and if you look at the penetration of venture debt in Australia versus other countries, and certainly if you look at the penetration of venture debt versus venture capital, it’s low on both accounts,” said NRF chief investment officer Mary Manning.
Lauren McGregor, a investment director at the NRF, said Emsent was appropriate for venture debt because it has an established product-market fit with “substantial” recurring revenue.
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