6 Examples of Commercial Drones and Industrial Drones
If you hear a strange high-pitch whizzing sound coming from above, then odds are that a drone is being flown near you. When investors get all excited about the potential of drones, it’s not military drones they’re thinking of but rather civilian drones. Because of increased density lithium batteries and the miniaturization of high-definition video cameras, now pretty much anyone can produce some fairly stunning videos with little training and not much capital outlay. The biggest player in this space is DJI with a 70% market share in consumer drones. Today you can get a drone bundle that includes free training for about $700:
Coincidentally, DJI offers customers the option to finance the purchase with Affirm, a company we just got done writing about.
While initially the focus was on consumer drone manufacturers, the hardware has matured and the dominant provider of the hardware has been established as a $10 billion Chinese startup called DJI. Now attention is turning to commercial drones for use in various industries. The bright minds at CB Insights put together a map that shows more than 70 drone startups that are looking to apply drone technology for enterprise use:
Recently we dedicated an entire article to looking at 7 Startups Using Drones for Inspections & Monitoring. In this article, we’ll take a look at a sample of 6 commercial drone startups that are targeting other types of industrial drone applications.
Drones in the clouds
Maybe the biggest commercial drone operator out there is San Francisco startup Airware which claims to be “the aerial information platform for the rapid development and safe operation of commercial drones“. Founded in 2011, Airware has managed to raise almost $110 million in quite a few rounds with the last one an undisclosed round that closed in February of this year and saw participation from the likes of Caterpillar, Intel, Google, John Chambers, General Electric, and Andreessen Horowitz to name a few. An article by Tech Crunch around the time of their last funding round had the following insightful things to say about Airware:
- They develop cloud based software and no hardware
- They’ve narrowed their business focus to mining, insurance, and construction
- Caterpillar is working with Airware to offer drone services to its own customers
While their website contains sparse details, we came across a decent 43-page slide deck on Airware from the National University of Singapore if you’re curious. Also under the umbrella of Airware (though a separate entity) is a fund run by Jonathan Downey, Founder and CEO of Airware which contains a bunch of startups the fund has taken an equity stake in.
They actually acquired one of these startups (Redbird) and they had this to say about startups who may want to pitch them:
While many of the fund recipients are using Airware’s Aerial Information Platform or are in the process of making their products and services compatible with the Platform, doing so is not a requirement for funding.
Maybe they’re inviting drone startups with ideas and then offering the platform for free in exchange for an equity stake? Hard to say, but with all the backing they have it’s likely that Airware is going to be dominating the commercial drone space on the software side.
Update 09/18/2018: Airware ceased operations a few days ago despite having been able to raise $118 million. The startup has reportedly ran out of money after trying to manufacture its own hardware that couldn’t compete with drone giant DJI.
The most commonly thought of use case for commercial drones is that of delivery so we’re going to look at all 6 of these startups. We’ve delved into Starship in our article on ground delivery drones before and also dedicated an article to Matternet which is already delivering stuff in various exotic countries that most Americans wouldn’t be able to find on a map. Of the remaining 4 drone delivery startups listed on the CB Insights map, one is Flirtey which was in the news not too long ago for delivering a few slurpees. One is Zipline which made it into our article on “3 Drone Delivery Startups Using Flying Drones” that covered the three we’ve already mentioned so far. That leaves us with two.
Drones the size of a 747
Founded in 2016, Silicon Valley startup Natilus has taken in $750K in funding to develop Boeing 747 sized cargo drones that will reduce air shipping costs by 50%, a venture that sounds so ridiculous that you need to see it to believe it:
While that may just be a bunch of fancy graphics, this audacious vision must have some legs because their seed funding came from one of the most visionary venture capital firms in Silicon Valley, Draper Fisher Jurvetson.
Black Boxes for Drones
Founded in 2013, Israeli startup Flytrex has taken in $3 million in the form of Series A in January of this year. In 2015 they came out with the ‘world’s first’ personal delivery drone that you could use to deliver stuff to family and friends. We had a really hard time finding many use cases for this platform aside from the very obvious one. Of course you couldn’t deal smack with these because the junkies would steal them but this thing sounds like an absolute must have for selling weed to stoners who will think it’s the best thing that ever happened to them.
Most recently, Flytrex has pivoted into selling black boxes for drones like this one:
Update 1/10/19: Flytrex has raised an additional $7.5 million in funding to scale up operations and improve the company’s existing drone delivery services as well as provide seed funding for further expansion. This brings the company’s total funding to $10.5 million to date.
That wraps up our summary of the 6 drone delivery startups listed by CB Insights. Until we get the legalities of flying sorted out (something that Airmap is working on) then it’s pretty safe to say that none of these startups are going to be getting off the ground.
“Drone Imagery as a Service”
Founded in 2014, Santa Monica, California startup Drone Base has taken in nearly $7 million in funding from some big name investors that include Accel Partners and also DJI, which should give you a good idea of what hardware is being used. The product offering is best described as “Drone Imagery as a Service” since that’s pretty much what’s on offer. The below diagram shows the simple process and some examples of industries that the service can prove useful for:
This is a great way for businesses to dip their toe in the water to see what sort of value drone imagery can bring to their business without having to make any investments in hardware or training. With DJI as an investor, they can expect lots of support in the way of discounted hardware and perhaps even some free marketing opportunities.
How to tell if your corn is dry
Founded in 2013, San Leandro, California startup TerrAvion has taken in $10 million in funding so far to develop an image delivery service for farmers. We first came across this company when we wrote about “8 Water Technology Startups Helping Agriculture Grow Up“. The types of pictures that TerrAvion takes for as little as $4 an acre are far more sophisticated than just some pretty picture of crop circles. The images contain multiple layers of information with use case like the following few examples:
Fortunately, one of our MBAs knows a lot about growing plants having grown some in his dorm room closet during university. He explained what each and every picture means and by far the most interesting one we thought was the bottom lower right picture titled “plugged center pivot emitter”. That picture simply tells the farmer that his sprinkler is plugged. These fascinating pictures provide such insights that it’s hard to imagine we could ever farm without them. Farmers are loving this technology, and TerrAvion has now mapped more than 7.6 billion acres (that’s almost 2X the size of Russia) and produced over 4.3 million maps for farmers.
0 to 80 mph in under a second
Sports is big business, and with all the spare time we’re going to have on our hands soon, the popularity of new types of sporting events like eSports serve to exercise the mind rather than the body. One such sport is drone racing, something that we’ve written about before along with a few other future sports. Founded in 2015, the “Drone Racing League” or (DRL) has already taken in $21 million in funding with most of that coming in the form of a Series B that closed this past March led by 21st Century Fox. Other investors in DRL include insurance giant Allianz (ETR:ALV) and even World Wrestling Entertainment (NYSE:WWE).
Drone racing is pretty much what it says on the tin. Guys wear goggles that let them see what the drone sees as they make their way through pre-set courses. Of course they aren’t using bog standard DJI drones but rather specialized racing drones like the Racer3 which goes from 0 to 80 mph in under a second or the world record setting RacerX which has a fastest one-way top speed of 179.78 mph. Let’s be honest though. Nobody really wants to see a bunch of nerds jockeying for status and attention. People want to see racing drones worth thousands of dollars smashing into isht at 100 miles per hour. The sport is not only attracting attention from the public over on ESPN and at live events, but also from sponsors like Budweiser, Disney, Swatch, and even the U.S. Air Force.
So there you have some examples of how drones are being used not just for recreation but to generate revenue. With well over 70 companies trying to make money off of drone technology, it’s only a matter of time before we start to see demand for commercial drone operators and finally robots will give us some jobs instead of taking them away.
Here at Nanalyze, we hold the lion's share of our investing dollars in a portfolio of 30 dividend growth stocks. Become a Nanalyze Premium subscriber to access our report on Quantigence - A Dividend Growth Investing Strategy. We'll show you how we selected our 30 stocks and teach you how to build your own dividend growth stock portfolio.