NOVEMBER 17 2022

Published in The Australian Financial Review

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Renowned US private equity fund KKR has joined the register of robotics and navigation technology company Advanced Navigation as part of a new $108 million funding round.

It is one of the largest venture capital raises for an Australian company since the tech correction hit. The business is one of few companies able to raise more than $100 million amid the tight funding market conditions.

Advanced Navigation could not disclose the valuation of the raise, but it is understood co-founders Xavier Orr and Chris Shaw gave up a standard 10 per cent to 15 per cent of equity under the deal, meaning the company is approaching the lauded unicorn status (a $1 billion valuation).

KKR’s investment is a divergence from its typical PE-style deals, and is the first investment in an Australian company from its next-generation technology growth strategy.

Mr Orr told The Australian Financial Review former prime minister and Advanced Navigation investor and director Malcolm Turnbull had introduced KKR to the company.

“We started the journey in April, so it took longer than it usually would have, but we ended up with a great investment partner in KKR, which has the global reach and expertise to scale up sales and [help] drive the growth of the company,” he said.

“Due diligence was higher in this round than in others ... [But] we’re in a unique position in that we’ve been mostly profitable. We are taking the money and will do a big growth and expansion push ... but we can pull levers to be back to profitability at any time.”‍

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Headed for the moon‍

Founded in 2012, Advanced Navigation was started to commercialise Mr Orr’s thesis research into AI-based inertial navigation (navigation techniques using a computer, motion sensors and rotation sensors to determine something’s positioning). The technique enables robots to navigate on their own when operating in environments where there is no GPS.

Its navigation systems, which are used by companies in a diverse array of industries including defence, automotive, agriculture and aerospace, are more accurate, reliable and much smaller than existing products.

Advanced Navigation has invented products for land, sea, air and space and has deployed more than 35,000 robotics solutions for companies such as Airbus, Boeing, Tesla, Google, Apple and General Motors.

The business will be the first Australian company to reach the moon as part of NASA’s Commercial Lunar Payload Services initiative, after securing a contract with US space company Intuitive Machines.

“We see significant opportunity for the company to tap into KKR’s global network, operational expertise, and experience in technology investing to accelerate the company’s efforts to expand globally and build out its platform,” KKR partner and head of growth equity for the Asia Pacific region Mukul Chawla said. 

KKR’s growth technology lead in Australia, New Zealand and South-East Asia, Louis Casey, will join the Advanced Navigation board, as will KKR Global Institute executive director Vance Serchuk.

Existing local investors also took part in the Series B round, including the deep tech investment fund founded by CSIRO, Main Sequence Ventures, OIF Ventures and Mr Turnbull. The CIA’s In-Q-Tel and Alpha Intelligence Capital also invested.

The capital raised will enable Advanced Navigation to significantly expand its global sales and marketing teams, and the business plans to double its headcount from 200 staff to 400 in the next year.

These efforts will be focused on countries in Asia and the Pacific such as Japan and South Korea, and growth in the US will be accelerated. The company will also double the size of its subsea navigation and robotics team.‍

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Access to additional capital‍

Advanced Navigation will also speed up R&D programs focused on transformative robotic, navigation, photonic and quantum sensing solutions.

In May, the business acquired Australian National University spin-out Vai Photonics in a deal worth up to $40 million, and a portion of this capital raise has also been earmarked for future deals.

Mr Orr said the company would also be able to access additional capital from KKR for acquisitions.

“The real key is being agile and nimble – being able to move quickly and keep an eye on the markets is key to success,” he said.

“There’s some really exciting stuff happening at the moment. We’re doing a lot of work with a company that does driverless trucks for hauling cargo between warehouses ... and we’ve had huge demand, more than we ever anticipated, for our Hydrus underwater vehicle.

“There’s [also] a high volume of wind farm applications that use our tech to allow wind turbines to more efficiently use wind energy.”

The capital raise brings Advanced Navigation’s total to $134 million.

Companies such as Cyara, Employment Hero, Scalapay, Zeller and Immutable were able to raise $100 million-plus rounds in the first three months of the year, but there have been few nine-figure VC raises since then.

In June, US-based, Aussie-founded NFT (non-fungible token) marketplace Magic Eden banked $US130 million, and in October Airwallex banked $US100 million.