Drone specialist Tekever’s valuation soars fivefold to $6.4bn

Drone specialist Tekever has cemented its status as one of Europe’s biggest defence start-ups after its valuation jumped almost fivefold to $6.4bn following its latest $580mn fundraising deal.

The Portuguese group on Wednesday announced the first close of its latest funding round, which was co-led by the University of California’s endowment and pension fund, UC Investments, which manages $150bn. It marks UC Investments’ first direct investment in Europe. Long-term investor Baillie Gifford also co-led the round.

Other new backers include Merlyn Advisors, a London-based fund which counts former UK defence secretary Ben Wallace among its portfolio managers.

The capital raise propels Tekever higher up the list of Europe’s most valuable defence tech start-ups. Private investment has continued to flood into the sector amid higher military spending by European governments despite concerns of inflated valuations, especially in areas such as drone development.

“The company is expanding [geographically] to several countries, as well as from a product point of view,” Ricardo Mendes, Tekever’s chief executive, told the FT. “M&A is also a very important part of this,” he added.

Europe boasts several defence tech start-ups valued at more than $1bn, including Germany’s Quantum Systems and Helsing. Quantum in the summer said it had raised $1.2bn at an $8bn valuation, while Helsing in July said it had raised $1.8bn, valuing it at $18bn.

Founded in Portugal in 2001, Tekever began developing software before moving into surveillance and reconnaissance drones. Its drones have been used for maritime surveillance — the company has won deals with the UK Home Office and the European Maritime Safety Agency — as well as on the battlefield in Ukraine.

The company, which does not disclose revenues but previously said it has been profitable for more than six years, said the new round valued it at roughly five times its previous valuation.

Tekever, which is building a drone factory in Swindon, just outside London, was recently selected to deliver “spy drones” for the British Army under a deal worth up to £400mn.

Under the recent contract with the Ministry of Defence, Tekever will provide its AR5 drones to soldiers to give them a better view of threats on the battlefield. The drones will replace the Army’s ageing fleet of Watchkeeper aircraft.

Mendes said securing the backing from a long-term investor such as UC Investments was a “powerful endorsement” of the company’s “technology, our team and our long-term vision”.

The fund, he said, not only had deep roots in “science and technology” but was focused on the “very long term” and was “not any US investor”.

“We believe [in] the long term it is very important to have a great relationship between Europe and the US even if you have some challenges circumstantially,” he said.

Jagdeep Singh Bachher, the University of California’s chief investment officer, said the fund looked for companies with “both technical depth and the ability to execute at scale”.