Quantum Systems, the drone maker that has raised €340 million in funding this year, is on a tear using that capital to grow. Today, it announced the acquisition of Fernride, a developer of autonomous trucks, to spearhead into a new business line around land vehicles. Fernride had run smaller projects with Germany’s armed forces, the companies said, and it had worked with Quantum Systems previously integrating into the latter company’s Mosaic platform. That is due to continue.
“Fernride has developed one of the most advanced and scalable autonomous ground platforms,” said Martin Karkour, CRO of Quantum Systems, in a statement. “By integrating their technology into Mosaic UXS, we are consistently implementing our vision of creating a connected ecosystem in which unmanned systems think, move and act as a single entity across different dimensions.”
Financial terms of the deal are not being disclosed but depending on how you look at it, it’s a bargain for Quantum Systems, or a semi-save for at least part of Fernride, which had run out of money earlier this year and was looking for a buyer.
Handlesblatt cites sources that say the deal was in the “low double digit millions” — a veritable fire sale considering that the company had to let go of half of its staff and that it was last valued at $145 million as recently as September of this year.
The smaller startup’s drastic devaluation underscores a couple of significant points.
Funding overall for startups in Europe remains sluggish (and perhaps prospects do, too), but one brighter spot has been frenetic activity around startups pitching anything to do with artificial intelligence, including autonomous driving. Situations like Fernride’s underscore some of the reckoning that might be in store for other AI companies too.
On the other hand, it also presents an opportunity for those with deeper pockets like Quantum Systems to play the consolidator.
Adding a company that focuses on land-based mobility not only will help Quantum Systems diversify its own product line, but it also gives it more IP and potential revenue to help shore up its own valuation as the AI bubble, and related defence tech bubble, faces more deflation.
With war in Ukraine still showing no signs of ending and the rest of Europe scrambling to improve its defence posture, Quantum Systems has been one of the defence tech companies striking while the iron is hot.
Earlier this week, the company announced a partnership with Ukrainian startup Frontline — of which Quantum Systems owns at least 10%, possibly more — to manufacture the latter company’s strike drones in Germany. Earlier this month, it announced the most recent tranche of this year’s funding — a €180 million injection that valued it at €3 billion. In October, Quantum Systems made a different acquisition, of Spleenlabs, to beef up its AI software capabilities. This is also alongside a deal with the German military to provide surveillance drones, starting with 147 and potentially extending to 600 devices.
One recurring theme in Quantum Systems’ acquisitions and investments is diversification and optionality.
The Frontline deal helps Quantum Systems indirectly extend into weapons-based systems without directly developing them itself — which would be a violation of its original charter as a non-weapons startup. Spleenlabs gives it a significant enhancement in computer vision. And now Fernride opens the door to building land-based systems that it can integrate with what it is building for other environments such as air and water. (On the latter, we should watch this space.)
Hendrik Kramer, CEO and co-founder of Fernride, is joining Quantum Systems with the deal. The company started as a commercial entity, which then moved into dual-use by targeting military applications. That is where the company is going to remain for now, although Kramer hits that it’s not closing the door on commercial altogether, even if that’s not where the money seems to be right now.
“Europe urgently needs sovereign autonomy solutions. By joining forces with Quantum Systems, we can take our technology to a new level,” he said in a statement. “Together with Quantum Systems, we are accelerating the deployment of our platform in the European defence sector, which is currently the most urgent environment globally for scaling autonomous ground systems. In the future, this experience will also be transferred back to civilian logistics applications, making our society safer and more resilient.”
