Case Study 03: Dronetech Startup Valuation in Pune, India

Background

Startup Venture C is a Pune-based dronetech company operating in the defence and unmanned aerial systems (UAS) space. Founded in 2021, the company designs and manufactures fixed-wing drones, quad-drones, and hex-drones for defence applications, supported by proprietary intellectual property, design patents, and in-house flight and ground control software.

At the time of engagement, Startup Venture C was in seed stage (early stage venture), with strong defence-sector traction in the pipeline and a clearly defined roadmap for scaling production and technology capabilities. The company was preparing to raise growth capital to commercialize its flagship products, scale operations, strengthen R&D, and support execution of its order pipeline.

Engagement Objective

The promoters engaged Chunder Khator & Associates to conduct an independent valuation discovery exercise in connection with a proposed fundraising round of ₹25 crore. The objective was to arrive at a fair and defensible valuation range that could be used as a reference during investor discussions, while capturing the company’s growth outlook, sector-specific dynamics, and early-stage execution risks.

The valuation discovery exercise was undertaken for fundraising purposes only, and not for compliance with any statutory or regulatory requirement.

Valuation Challenges

The valuation of Startup Venture C involved addressing several complexities unique to defence-focused dronetech startups:

• Long sales and execution cycles driven by defence procurement processes

• High dependence on future scalability and manufacturing execution

• Limited operating history but strong projected revenue growth based on orders in the pipeline

• Elevated business and liquidity risks typical of early stage ventures

These factors necessitated a valuation approach that adopted not one but multiple valuation methodologies.

Our Approach

To derive a credible valuation range, we adopted a multi-method valuation framework, triangulating value using:

• Discounted Cash Flow (DCF) Method

• Venture Capital (VC) Method

• Comparable Transaction Multiple (CTM) Method

Given that the DCF method captured company-specific projections, technology differentiation, and expected cash flows in greater detail, a higher weightage was assigned to the DCF outcome, with the VC and CTM methods serving as investor-return and market benchmarking tools respectively.

Key Valuation Considerations

1. Investor Return Expectations and Risk Profile - For VCM valuation, investor return expectations were aligned with benchmarks applicable to early growth-stage defence and deeptech investments. A higher expected IRR was considered to reflect execution risk, capital intensity, and the time required to achieve scale and liquidity. Dilution in investor's stakes over the next 5 years was derived from our proprietary research on India's startup ecosystem.

2. Entity-Specific and Liquidity Risk Adjustments - For discount rate used in DCF valuation, additional risk premiums were incorporated to account for the non-marketable nature of the equity interest, dependence on future fundraising rounds, and sector-specific risks associated with defence procurement and regulatory clearances.

3. Comparable Transactions and Market Benchmarking - Comparable fundraising transactions involving Indian defence and UAV companies were analysed under the CTM valuation. These comparables provided insight into valuation multiples applied to similar business models and stages, while outliers were excluded to avoid distortion. Here's what the comps table looked like:

Company Name	Sector	Funding Round	Pre-Money Valuation (₹ Cr.)	Forward Revenue (₹ Cr.)	Forward Revenue Multiple
ideaForge	Multi-sector UAV	Series C	~925	~196	~4.7x
Newspace Research & Technologies	Defence UAV	Series A	~660	~108	~6.1x
Kinetix Military Equipment	Defence UAV	Seed	~27	~5.2	~5.2x

4. Sensitivity Analysis and Assumption Testing - Key assumptions, such as revenue discount rate and terminal growth rate under the DCF valuation, investor return expectations under the VCM valuation and revenue multiple under the CTM valuation, were stress-tested to evaluate their impact on valuation outcomes. This ensured robustness of the valuation range and transparency around key value drivers.

Outcome

The valuation exercise resulted in a defensible valuation range that balanced Startup Venture C’s growth potential with investor expectations and sector-specific risks. The outcome provided a credible anchor for fundraising negotiations and enabled the founders to articulate value drivers clearly to prospective investors.

Conclusion

This case study illustrates how a structured, multi-method approach to dronetech startup valuation in Pune can support informed fundraising decisions in complex, high-growth sectors. At Chunder Khator & Associates, our valuation discovery engagements are designed to deliver clarity, credibility, and confidence, helping founders and investors navigate valuation discussions with a shared understanding of risk and opportunity. Our valuation services includes:

• Valuation Discovery for Fundraise

• Valuation Certificates for Compliance

• ESOP Valuation

• Valuation for Mergers & Acquisitions

• Valuation for Financial Reporting

• Valuation Review & Second Opinions

Read more about our valuation services here.

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Disclaimer: The material herein is provided for informational purposes only. The information should not be viewed as professional, legal or other advice. Professional advice should be sought prior to actions on any of the information contained herein. CKA is not responsible for any matter concluded by any person based on the contents of this article.