Drone detector DroneShield to raise $7m on ASX
The maker of a drone detection system used at the last two Boston marathons is raising $7 million for an ASX listing and will move all its research and development to Australia.
DroneShield, founded in Virginia in 2014 by two former defence contractors, claims to know the acoustic signature of every drone on the market and to be able to detect them via a network of sensors.
While it has only shipped about 250 of these sensors to date, the clients for them have included prisons, a Middle East hotel chain concerned about guest privacy, and the Boston Police Department, which used the system to enforce its “no drone zone” above the last two Boston marathons.
The company raised $US950,000 in convertible debt in August from New York’s Bergen Asset Management, which started the process of DroneShield becoming an Australian company.
Bergen’s chief investment officer Eugene Tablis is a veteran of structured equity deals for already listed Australian microcaps (such as Prima Biomed) but, in DroneShield’s case, decided to take it public on the ASX.
SECOND TO NONE
“[Tablis] understands why the ASX is getting a worldwide reputation as a good place to list technology companies,” said James Walker, who has taken over as DroneShield’s chief executive after three years’ growing Canberra-based telematics start-up, Seeing Machines.
“I know from experience that the skills and availability of engineers in Australia are second to none, and our research and development tax incentives are about the best in the world, too.”
Remarkably, DroneShield won’t even be the ASX’s first drone detection stock when it lists. That distinction goes to Department 13, a US company that backdoor-listed in January and this month won a US Department of Defense contract to design counter-drone technology based on patented “wireless protocol manipulation” technology.
DroneShield’s Mr Walker and chief financial officer Oleg Vornik, a former RBC Capital Markets banker in Sydney, will oversee a fundraising of between $5 million and $7 million after the prospectus was launched last week.
DroneShield’s presentation to investors claims that 12 million commercial drones will be in operation globally by 2020. It is betting that legislation controlling drones will soon catch up with their ubiquity. The Sydney development centre, which Walker foresees will employ 50 engineers, is intended to integrate DroneShield’s existing acoustic detection technology with detection methods based on cameras and radio waves.
In many countries, all the system can do about a detected drone is notify its client by email or text message. The ability to take drones out of the sky will be built in, once legislation allows.
Walker laments that, in Australia, drones have the same standing in law as aeroplanes, so interfering with one (even with a net gun such as the one DroneShieldoffered to the Boston authorities) is illegal.
Drones are also off-limits for US state police, although federal police guarding some sites are able to take them down. Walker says laws in many Asian and Middle Eastern countries are comparatively aggressive toward unwanted drones, particularly after such incidents as when a drone carrying radioactive material landed on the Japanese prime minister’s roof in last year.
The two founders of DroneShield, Brian Hearing and John Franklin, will remain based in Virginia and keep the company’s acoustic signature library updated. A graduate of Washington DC-based incubator 1776 (now backed by Australian non-bank Pepper), DroneShield’s sensor systems will continue to be manufactured by ICMI Technologies in the Virginian town of Herndon.
DroneShield has assembled a high-profile advisory board including Admiral Jay Cohen, former chief of Naval Research (United States Navy), Carol Haave (former assistant secretary for international affairs at the Department of Homeland Security and the former deputy undersecretary of defence for Counterintelligence and Security), General Robin Brims (commander of the UK Field Army in 2005), Robert Hill, former Australian minister for defence, and Joanna Riley, 1-Page founder.