Germany: EIB supports drone startup Quantum Systems with venture debt
27 July 2021
The EIB loan is part of the European Growth Finance Facility that offers startups an alternative to finding additional shareholders.
Quantum drones combine vertical take-off and landing-capabilities with long-range surveillance capabilities that can help governments in cases of natural catastrophes like the recent floods in Germany, Belgium and the Netherlands.
Munich-based FCF Fox Corporate Finance supported Quantum as an advisor.
The European Investment Bank (EIB) and drone startup Quantum Systems have concluded a loan agreement of up to €10 million to further develop capabilities in the areas of autonomous flight and artificial intelligence.
Quantum Systems, founded in 2015, successfully developed drones with a wing flight mode that enables long travel times, long ranges and quiet flight by utilising electrical and aerodynamic efficiency. The drones are capable of vertical take-off and landing. The founders registered a patent for a vertically launchable unmanned transition aircraft in 2012.
The drones can be used in search and rescue operations after catastrophes like the recent floods in Germany, Belgium, Luxembourg and the Netherlands. Further areas of applications are smart farming, volume calculation in open-pit mining, surveying work for large construction sites, real-time situational awareness, tactical mapping and automated railway inspection.
Quantum Systems’ technology promises competitive advantages in areas like coverage, reliability, endurance, flights in windy conditions, high flight speed and autonomous flying abilities. The company targets the growing governmental market — where a limited number of companies based in the United States and Israel have historically provided systems — and the commercial market.
The EIB loan is part of the European Growth Finance Facility (EGFF), via which innovative startups can get a debt alternative to equity financing. The EIB thereby offers startups an alternative to finding additional shareholders and allows the founders to retain majority ownership. The programme is part of the European Fund for Strategic Investment (EFSI).
“We are proud of this unique funding product that met an urgent demand. Venture debt protects ownership, fuels growth and helps to bring new technologies to the market,” said EIB Vice-President Ambroise Fayolle, responsible for projects in Germany and engagements related to the environment, climate action and the circular economy. “If we want to support the market leaders of tomorrow, we need to take certain risks. We believe in the potential of the companies that we support and are committed to helping them grow by providing tailor-made financing.”
European Commissioner Mariya Gabriel, responsible for Innovation, Research, Culture, Education and Youth praised the European Union’s innovation programme, saying: “We are glad to enable new ideas to be turned into concrete innovations by big and small entrepreneurs, improving our collective prosperity. The EGFF is an essential instrument to foster the competitiveness of European economy.”
“With the fresh capital, we want to expand our research and development capacities in the areas of autonomous flight and artificial intelligence and drive the further vertical integration of system-critical components of the vertical take-off and landing drones,” said Florian Seibel, CEO and co-founder of Quantum Systems. “The funds are used to increase sales and marketing measures as well as the ramp-up of production and operations, supporting the company's strong growth.” In 2020, Quantum Systems achieved a 155% increase in revenue compared to the previous year.
The advisors of FCF Fox Corporate Finance supported Quantum Systems in its search for financing. “Especially for young and innovative companies, the EIB's venture debt financing offers enormous advantages in financing growth measures such as R&D, sales, marketing or building-up working,” said FCF-Director Florian Theyermann. “One of the advantages of such an EIB loan is that, in contrast to a capital increase, the founder’s shares are not diluted.”
The European Investment Bank (EIB) is the long-term lending institution of the European Union owned by its Member States. It makes long-term finance available for sound investment in order to contribute towards EU policy goals.
Investment Plan for Europe
The Investment Plan for Europe is one of the EU’s top priorities to boost investment and to create jobs and growth by making smarter use of existing and new financial resources. The EIB Group is playing a vital role in this investment drive. Through guarantees from the European Fund for Strategic Investments (EFSI), the EIB and the EIF are able to take on a higher share of project risk, encouraging private finance providers to participate in projects. In addition, EFSI is accompanied by a new advisory service, the European Investment Advisory Hub, which enables public and private project operators to structure their investment projects more professionally. The projects and agreements approved for financing under EFSI so far are expected to mobilise €546.5 billion in investments and support more than 1.4 million start-ups and small and medium-sized enterprises (SMEs) across all EU Member States.
The European Growth Finance Facility (EGFF), as part of EFSI, provides venture debt financing for innovative startups. Innovative startups can get either get a debt alternative to equity financing or add-on debt financing to capital increases in order to raise the total financing amount. The EIB thereby offers startups an alternative to finding additional shareholders.
Quantum Systems GmbH develops and deploys small Unmanned Aircraft Systems (sUAS) for the geospatial community (commercial product line) and the defence, security, and intelligence community (governmental product line), providing unprecedented data quality, efficiency, and operational usability.
The fully autonomous sUAS with AI edge computing capabilities enable its users to capitalise on the emerging megatrend of autonomous sUAS data acquisition solutions that will open entirely new markets and applications. All Quantum Systems sUAS combine eVTOL (electrical vertical take-off and landing) capabilities with long-range utilising electrical and aerodynamic efficiency.
The continuous integration of state-of-the-art sensors into the systems allows for increased aerial data intelligence. Quantum-Systems was founded in 2015 and is headquartered at Special Airport Oberpfaffenhofen, 20 km west of Munich.
FCF Fox Corporate Finance
FCF is a specialised investment bank and a financing specialist, advising public and private small/mid-market companies in German-speaking regions. FCF structures, arranges and places equity and debt capital transactions and supports its clients’ growth, IPO/pre-IPO, acquisition and standard balance sheet (re-)financing strategies.
Founded in 2005 and headquartered in Munich, FCF has direct relationships and works with all leading German, European and international financiers, lenders and investors addressing German small/mid-cap companies.
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