Tonbo scales up the security curve

The first non-NATO supplier of night-vision imaging systems to NATO countries claims it helps in better interpretation of images for various defence bodies

Lucas Arnold, a former NATO commander, says: “It is difficult to replace old products with new technology... and one of the things Arvind (Lakshmikumar) has been focusing on is putting high-end hardware that is ahead of the curve for certain systems and then using software changes to upgrade functionality.” He meant the multi-sensor-controlled imaging for defence operations. “This should make their systems future-proof,” Arnold, who is a user of Tonbo’s products, says. 

Tonbo, founded by BITS-Pilani alumnus Lakshmikumar, is the first firm outside the NATO countries to supply advanced imaging equipment to the US. Such equipment for varied non-civilian use is not new. But Tonbo’s devices help in better interpretation, says Lakshmikumar. “Tonbo’s technology is a combination of fundamental innovations in the image acquisition process along with powerful computer vision algorithms to support superior imaging and scene interpretation for a large range of applications.”

The Bengaluru-based start-up, which raised Rs 120 crore in the second round of funding (Series B) last month, earns its revenues by selling imaging products to defence bodies and homeland security in the US, India, and 23 other regions. Tonbo counts supporting the Indian Air Force in ensuring stop-gap security arrangements at the Pathankot airbase immediately after the attack last year as one of the success stories. 

Opportunity

Lakshmikumar says the recent funding “would be to focus on technologies into ancillary markets of automotive safety, autonomous navigation, etc”. Analysts say the market for electro-optics imaging for defence alone is worth nearly $5 billion. Add commercial use across nations, it could be bigger. “Tonbo, with its asset-light business model with consumer electronics hardware, will be uniquely positioned to take a major share of this market. It is not a single geography or single customer market. There is sufficient diversity, which makes this business attractive,” says Ganapathy Subramaniam, managing partner, WRV Capital. The start-up has a strong pipeline from Greece, the Philippines, Turkey, Italy, and Israel, adds Subramaniam.

“Tonbo’s biggest achievement is creating a disruption in the procurement of military electro-optics systems and democratising night vision technology. Emerging markets have always needed high-end imaging systems for surveillance, reconnaissance and targeting,” says Lakshmikumar. 

Tonbo can potentially be a “game changer” and attract more investment in deep technology and science, says a Bengaluru-based analyst. “Against the backdrop of India being dubbed as a copycat start-up nation, Tonbo illumines a real deep-tech innovation that is emerging as the ‘pride of India’. It is high time investors started supporting deep science- and deep technology-based innovations originating in India, a grossly underfunded space. Time for invented in India, invented for the world.”

Growth

Ramesh Radhakrishnan, managing partner, Artiman Ventures, and his team were looking for a start-up with out-of-the-box solutions. Tonbo was able to attract the first round of funding. “We found a team in India capable of working on world-class software at that speed and power. The systems prove there is talent here and these technologies do not come only from the US and Europe,” says Radhakrishnan.

Lakshikumar who did his doctoral work in computer vision and imaging  from Carnegie Mellon University, says a combination of efficient imaging and the layer of software could be used for non-military purpose for consumers at scale. Tonbo, founded in 2008, is profitable and expects to clock revenues of Rs 100 crore in FY18. “While we have found acceptance for our products in defence and homeland security worldwide, migrating to enterprise and consumer is our main challenge over the next couple of years,” he says, adding Tonbo should be a Rs 500-crore start-up by 2019-20 on a strong order book. 

Challenges 

As it plans to penetrate into commercial market, Tonbo should focus on a strong sales network and team, says Radhakrishnan.  

An efficient sales team, investors and analysts say, would be as important as concentrating on the right product fit for the commercial market over the next couple of years.

Expert take

Unique start-up will face some challenges, says Dinesh Goel, angel investor and start-up mentor
 

Tonbo Imaging is a fairly unique start-up that is developing multi-sensor electro-optical smart imaging systems. Having proven its technology for defence systems, it is planning to expand its footprint into the consumer electronics segment. The company has more than 150 people with a presence in India, Singapore, and the US, with plans to establish itself in Europe. 

It is the only Indian firm that has got orders from the US defence industry. Since Tonbo is operating with a positive bottom line, it is no longer an early stage start-up. The challenge, however, will be to deliver on growth in both defence and commercial segments across the world.

As it expands its customer and geographical base, Tonbo is likely to face intense competition from similar tech companies in Israel and the US/Europe. And commercial business requires different capabilities for success relative to the defence market focused on so far by the company. The ability to customise products at a price point that’s attractive should work. Further, the large market size for such technology and a wide range of applications would also offer enough of a battlefield to corner a fair market share.