XAG, or XAircraft (“Jifei Technology” in Chinese), a Guangzhou-based drone manufacturer specializing in the agricultural sector, on Monday announced that it raised RMB 1.2 billion (USD 182 million), led by Baidu Capital and Softbank Vision Fund 2, marking a record financing round in the Chinese agtech space, where the demand for unmanned aerial vehicles is rising amid the pandemic.
Sinovation Ventures, Guangzhou-based Yuexiu Industrial Fund, and state-backed Guangzhou Xinxin (“emerging”) Capital, together with former backers, also joined the round. China Renaissance acted as the financial advisor for the deal. In January of last year, XAG reportedly closed a Series C round, raising an undisclosed amount of money from investors including Topsec, Ants Capital, and Centerlab Investment Holding Limited, according to Chinese corporate data tracker Itjuzi.
Founded in 2007, drone maker XAG ventured into agtech in 2013, in a bid to provide more cost-effective alternatives to massive manual operations, especially at a time of aging labor forces. Currently, XAG has developed agricultural drones, remote sensing drones, unmanned ground vehicles, and agriculture loT devices and software, enabling accurate crop spraying, granular spreading, field scouting, on-farm material delivery, real-time monitoring, and management.
By the end of August, XAG’s services covered more than 8.72 million farmers and 600 million acres, XAG’s spokesperson told KrASIA. It also expanded to 42 countries and regions outside of China, focusing on Japan, Korea, and Australia. “With the acceleration of urbanization, our agriculture is facing the serious challenge of aging and hollowing out,” CEO and founder Peng Bin said at a Forbes conference in October.
Per China’s National Bureau of Statistics, the average age of farmers has reached 53 years, with 34% of them over 55 years old. “The biggest question facing humanity is, who will produce the food in the future?” he said.
The COVID-19 pandemic, which reduced the movement of people, also raised the importance of unmanned devices, XAG told KrASIA, without revealing specific sales data. In February, the company deployed its drones to help disinfect populated areas to curb the spread of the virus.
According to a report by the Ministry of Agriculture and Rural Affairs, the size of the smart agriculture market in China is predicted to reach RMB 200 billion (USD 30.4 billion) by this year.
XAG will use the fresh capital to strengthen its R&D and manufacturing, improve its channel-service capabilities, and for the construction of digital agricultural infrastructure and “unmanned farms.”
(The company name XAG has been corrected from a previous version. Update: XAG reached out to clarify that it didn’t announce any Series C fundraising.)