The high stakes of investing in tech

HOW are the big venture capital-backed Malaysian technology companies doing?

Take the case of Aerodyne Group. The Malaysian-based drone company has raised a lot of money from venture capital and government-linked investment companies (GLICs) in the country.

It was said to be looking to go public in 2024 but that has not materialised. This begs the question of when and how will its backers get to exit the company profitably.

Founded in 2014 to provide drone surveillance services, Aerodyne raised US$30mil in its 2022 Series C financing round, increasing its valuation then to nearly US$700mil.

It was reported that one of Aerodyne’s long-time clients, Petroliam Nasional Bhd, led this funding round.

The capital injection also included a follow-on investment by Retirement Fund (Inc) (KWAP), which had previously invested in Aerodyne in 2020.

Other notable backers include Axiata Group Bhd, Gobi Partners, China-based North Summit Capital, Indonesia-based Kejora Capital, and Japan-based Drone Fund.

Technology companies hold immense promise, which explains why investors are always keen to gain exposure to such assets.

However, the tech industry is highly competitive, with players vying on a global stage against the brightest talents.

Venture capitalists investing in tech companies need to be on top of their game in order to ensure their bets have a strong chance of success.

This is one reason many traditional investment funds avoid direct investments in tech startups, opting instead for the safer route of investing in highly ranked and proven venture capital companies and following their lead.

In 2023, KWAP invested around US$30mil into an Indonesian tech-driven company called eFishery Pte.

However, that investment ran into trouble due to the startup’s financial misrepresentations and operational difficulties.

Aerodyne has long been regarded as a promising Malaysian company and was touted as the world’s largest drone firm.

It had planned for an initial public offering last year and was said to be in talks with at least three stock exchanges to list its shares.

Now, all eyes are on whether Aerodyne’s investors, including the Malaysian GLICs, will get their returns.