Waterloo Region drone maker Aeryon Labs is set to double its operations after securing $60 million in investment to boost its presence in the fast-growing global market for small unmanned aerial systems.

Aeryon, which currently employs 100 people in Waterloo’s north end, will likely add another 100 employees across all areas of the business over the next year, along with another facility to handle the growth, CEO Dave Kroetsch told Communitech News today.

“We’re thrilled to be in this growth stage and to keep our business in Canada,” Kroetsch said during a busy day of media interviews.

The equity investment from U.S.-based Summit Partners will help the eight-year-old company build on its leading position in the high-end sUAS market, said Kroetsch, whose drones serve mission-critical functions for police, military and utility agencies.

The company’s Scout and SkyRanger drones have been shipped to more than 35 countries and have shown up frequently in high-profile news stories, including the Nepal earthquake last April and 2011 uprising against Libyan dictator Moammar Gadhafi.

Kroetsch said Canada’s more permissive aviation and export regulations, along with Waterloo Region’s tradition of building business as opposed to consumer technology, have been key to Aeryon’s success.

“Waterloo’s got a very enterprise-minded DNA, and we chose right from the beginning of Aeryon not to build toys, but to build tools,” he said. “When you look at the demographic of our customers, whether they’re military, police, the power-line inspectors or the emergency response personnel, these are people who need to get a job done.”

The presence of BlackBerry (formerly Research In Motion), in particular, has given Aeryon access to key, enterprise-grade technical talent, said Kroetsch, who like many in his company, once worked at RIM as a co-op student.

“If you look under the hood of our technology, and replace the screen on a BlackBerry with four propellers, from a technology perspective, it’s very similar,” he said. “We do high-density electronics; we do batteries; we do GPS; CPUs; all that kind of stuff that’s similar to hand-held technology.”

On the regulatory side, Aeryon has gained a years-long head start on American competitors due to its Canadian customers’ ability to fly their drones relatively freely, compared to the more restrictive aviation environment in the U.S.

Those customers quickly proved the value of Aeryon’s drones. The Ontario Provincial Police, for example, have drastically cut the amount of time it takes to reconstruct traffic accidents, meaning highway roadblocks can be lifted much sooner after a collision takes place.

“They pull it out of the trunk of the car, press go, come back and away they go and they’re done mapping their crime scene,” Kroetsch said, adding that the time for accident mapping has been reduced, in some cases, to three minutes from 90. “That’s obviously game-changing.”

This latest investment, the largest this year for a Waterloo Region technology company, reflects the growing market for small, easy-to-deploy drones, which analysts estimate will reach $6 billion in the next five years.

While the rise of cheap, consumer-grade drones means Aeryon has to justify its higher price point to some customers, it has also highlighted the difference between toys and tools, Kroetsch said.

“Somebody will go and buy a $500 drone and they’ll try it, and they’ll learn that on a windy day, it’ll blow away and the imagery isn’t very stable, and you can’t zoom in, and it doesn’t work in the rain,” he said.

“We’ve done everything from air-sampling payloads to our most recent camera, where you can read a licence plate from 1,000 feet away, or count the threads on a bolt on a power line, or read the serial number of an insulator from 50 or 60 feet away.”

Earlier this week, when fire broke out at the construction site for Waterloo Region’s light rail transit maintenance facility, which is close to Aeryon’s headquarters, the company used a drone to shoot high-quality video of the fire, despite winds in excess of 50 kilometres an hour.

“We happened to be flying in our parking lot, which is about 1,000 feet away from there, and we got some fantastic pictures,” Kroetsch said. “So much so that we’ve actually been talking to the Fire Marshal . . . that’s where the value really is in what we do.”

Kroetsch said he’s gratified that the new investment will allow Aeryon to keep building towards a larger presence in Canada.

“You see a lot of businesses, by the time they get to our size and scale, get swallowed up by somebody else,” he said. “We’ve got the opportunity to build something here to keep Canada on the world stage.”

Summit Partners, a growth equity firm headquartered in Boston with offices in Menlo Park, Calif. and London, U.K., has invested in more than 400 companies around the world, in technology, health care and other sectors. More than 135 of those have gone public and more than 150 have been acquired through mergers or sales.

Len Ferrington, a Managing Director based at Summit’s Menlo Park office who will join Aeryon’s board of directors, called the drone-maker “a best-of-breed provider” positioned to capitalize on a large and growing market.

About The Author

Anthony Reinhart
Director, Editorial Strategy
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Anthony Reinhart is a veteran journalist who left the Globe and Mail to join Communitech in 2011. Tony has covered everything from crime, politics and courts to business, the arts and sports, and his writing has won numerous journalism awards. He is Communitech's Director of Editorial Strategy and senior staff writer.