Bob Chua comes in as angel investor with seven-figure investment
15 drones assembled, cost between US$100,000 and US$500,000
THE tourist brochures hail Sabah as the land below the wind, with its rainforests, wild life, and South-East Asia’s second highest mountain, Mount Kinabalu.
Well, along with those idyllic images, the brochures may soon start sporting images of drones as well. This is because Sabah is also home to an 18-month drone startup, Dragonfly Robotix, founded by a former engineer from the United Kingdom, Bob Hartley, and his friend, Johan Arriffin Samad, a retired Malaysian executive from the oil and gas industry.
Hartley credits Johan as being the real catalyst behind the setting up of the startup, which has recently seen the entry of entrepreneur Bob Chua with an undisclosed angel investment in the low seven-digit range. An entrepreneur who is currently working on a much publicised big data venture, Chua is a Sabahan himself.
But there was no sentimental lever that compelled Chua to invest in Dragonfly Robotix, which has gained solid traction in Sabah with business from the oil and gas and agriculture sectors.
Rather it was the potential of Dragonfly Robotix to scale and position itself as a leading Asian drone technology player, says Chua.
“My involvement is to help them get to the next level by winning larger contracts and scaling them, offer strategic thinking and to offer execution of the strategy with speed,” he says.
He adds that it was the potential of the drone sector that compelled him to be part of the growth story for Dragonfly Robotix, as well as the quality of the team that cofounder Bob Hartley has put together.
One differentiator Dragonfly Robotix has is the fact that it was the first drone company to receive Department of Civil Aviation approval in Malaysia. “It is definitely a huge advantage to keep us ahead of the curve,” notes Chua.
“It has also brought in all the components and assembled the drones here in Kota Kinabalu,” he says, adding Dragonfly Robotix has “military-grade equipment for search-and-rescue [operations] too.”
While Hartley and Johan may have started out as drone hobbyists, the former has assembled a team spread across a number of countries (see Q&A below) who have contributed their expertise to assemble the drones. Thus far the team has assembled 15 drones, with prices ranging from US$100,000 to US$500,000.
The drone story is hot in the United States, with the Federal Aviation Administration predicting a market size of 20,000 drones by the end of 2020 and with the likes of Amazon, Google and Sears offering their own versions, but the scene is certainly picking up in Asia as well.
Former Wired editor Chris Anderson’s 3D Robotics raised US$30 million last September, and while we may not see such numbers in this part of the world, the market growth in Asia is certainly there, as typified by Dragonfly’s 40% year-on-year growth.
Johan shares that among the large projects Dragonfly Robotix has won is as part of a consortium with Punchlloyd of India and Dialog of Kuala Lumpur to build a 520km pipeline from Kimanis in Sabah to Bintulu in Sarawak.
In the following Q&A with Hartley, he shares why he picked Malaysia as the base to launch Dragonfly Robotix, the market size and top three challenges he is facing.
DNA: Who among the founders saw a market opportunity in this space, convinced the others to join him, and decided it should be done from a medium-cost country in Asia?
Hartley (pic above): It would be unfair to single out one individual who could be described as the ‘founder’ of Dragonfly Robotix but, if pressed, I would have to say Dr Johan Arrifin Samad had the foresight and practical knowledge to recognise the potential of such an organisation.
He has a wealth of experience [in industries] ranging from oil and gas and construction, to local government and many other aspects of the Malaysian/ regional business and political scene where the implementation of advanced technologies could have massive benefits.
Johan is Malaysian and it was a natural progression for him to look first to a region he was familiar with, rather than launching this venture in a country where he was less experienced.
The other people involved in the company also bring a wealth of experience and knowledge, and it is the collaborative nature of the company which makes it both unique and exciting.
That experience is global and our research and development is being conducted by our teams in Spain, the United Kingdom, the United States as well as the South-East Asian region.
DNA: Are there not UK government funds available for companies like yours?
Hartley: The United Kingdom and other European countries do sponsor and invest in the technology industry, but suffer from high manufacturing costs, high outlet rental costs, high local salaries and a reputation for industrial action.
The funds allocated to the technology industry are often insufficient to maintain production, post establishment of a viable industry. This is why we see many of the large technology companies in the United Kingdom moving their business interests to the Indian subcontinent and South-East Asia.
A classic example of this would be Dyson, a reputable company with an excellent history in design and innovation, which has been forced to move some of its operations to Malaysia and China due to mounting costs and unstable operating conditions in the United Kingdom.
DNA: How much did the founders put up and how much was raised in the first angel round and who is the angel?
Hartley: Unfortunately we are not at liberty to discuss this at this moment
DNA: How big is the market size you are going after?
Hartley: The current addressable market is in some way disrupting the aviation sector where helicopters and light-wing aircraft are used for aerial photography, etc.
From another angle, we play a role in potentially replacing high-risk resources and assets in situations such as search and rescue, accident assessment, high-risk inspection (oil-rig platforms, aircraft inspections) – hence there is no single figure I could quote.
DNA: What have been your top three challenges? How are you working to resolve them?
Hartley: I would say the top three challenges would be:
Belief in the concept: It is always hard to convince potential investors that the ideas you have are worthy of significant investment and to recruit others to share your ideas and work towards a common goal. We have overcome this initial challenge by presenting plausible design ideas, sound business plans and using our extensive list of like-minded individuals and companies to help us show that we have a viable business and the potential to grow and develop.
Security: In an environment where ideas are valuable and information and data are key to the success or failure of a business, we have had to control and protect the ideas and equipment we have produced to prevent copying. This is a constant battle and sometimes takes up resources and efforts that could be better used in research and development.
Talent: Trying to find ready-made experts for a concept design is nigh on impossible. Time taken up on interviewing, assessing and training a potential workforce is intensive and expensive. We hope that the future Dragonfly Robotix will develop its own in-house expertise through university/ college-based programmes where we can invest in the bright young minds of students to become the future managers.
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