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During the Russia-Ukraine war that began in 2022, military drones played a significant role and are now being recognized as a next-generation strategic asset. Drones were also actively used in the subsequent U.S.-Iraq war, emerging as a new core weapon in the defense industry.
Currently, China holds a 70% share of the global drone market. However, given that the defense sector is directly linked to national defense capabilities, there is high demand for domestic production. In this defense drone market, a newly emerging domestic startup is drawing attention.
It is AD Systems, a small stealth drone specialist defense startup. AD Systems, which handles the entire drone manufacturing process in-house, recently succeeded in securing Series A funding worth 13 billion won.
This investment round was led by LB Investment, with participation from Korea Development Bank, Smilegate Investment, Future Asset Venture Investment, Flux Ventures, and JB Investment. As a result, AD Systems' cumulative investment raised has reached approximately 18.4 billion won.
Investors highly evaluated AD Systems as one of the few domestic companies capable of handling all aspects of unmanned aircraft development in-house, from airframe design and composite material manufacturing to flight control and avionics software development, and system integration. It is explained that this ability to meet specific customer requirements is a strength, especially given the relatively small size of the domestic drone market.
AD Systems' current flagship model, 'AD3000', takes off vertically using propellers but flies using fixed wings on both sides, similar to conventional airplanes. Fixed-wing aircraft have significantly longer endurance than multi-propeller types thanks to reduced air resistance.
In fact, the AE3000 boasts a flight time 2 to 3 times longer than competing drones. Last May, it successfully achieved continuous flight for 2 hours and 55 minutes, the longest duration recorded in South Korea for small drones, at a demonstration attended by military officials.
Choi Jae-hoon, Senior Reviewer at LB Investment who led this investment round, stated, "Among the few domestic companies capable of producing fixed-wing drones, we judged AD Systems to be the fastest-growing company." He added, "It is also attractive that their technology has been recognized, leading to contracts with major domestic defense corporations and development of follow-up models."
AD Systems recently secured a large-scale order, further enhancing its investment appeal. Last month on the 30th, the company signed an 8.7 billion won contract with the Army Central Contract Office to supply training drones. This amount is approximately four times last year's sales. Under this contract, AD Systems will supply a total of 3,792 units of the training drone 'AD-ME1' to designated army delivery units.
This project is a defense power support initiative aimed at upgrading the army's drone education and training systems and cultivating professional operational personnel. The delivery period runs from the contract signing date until December 27 this year, and it is highly likely that the contract value will be reflected in this year's sales.
Kim Jeong-ho, CEO of AD Systems, said, "The drones we developed are specialized products for reconnaissance and attack, featuring stealth capabilities and flight times significantly longer than those of competitors." He added, "We are also pursuing expansion into overseas markets, and we expect to announce meaningful export news soon."
There is also high anticipation for the next-generation model 'AD4000' currently under development. This next-generation stealth unmanned aircraft, capable of performing both long-range reconnaissance and attack missions, aims to establish itself as a new standard for military drones by leveraging its long flight time as a key advantage.
AD Systems' trajectory is similar to that of suicide drone company Near's Lab, which recently listed on the KOSDAQ market after receiving high corporate valuation recognition. Consequently, there are assessments that AD Systems' likelihood of an IPO (corporate valuation) has increased. Near's Lab gained momentum for its IPO (initial public offering) last year by securing a 15 billion won supply contract in the Middle East region.
Cho Min-ha, Senior Reviewer at JB Investment who invested in both the pre-Series A round and this current round, emphasized, "AD Systems successfully completed all business plans it set during its pre-Series A investment last year within one year." He added, "We expect it to grow into a company that will play a key role in domesticating defense drones in South Korea."
[MoneyToday startup media platform Unicorn Factory]
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