There’s something special happening with drones… they’re going the inevitable way of all technology. That is, they’re getting smaller and better. It may be helpful to think of it like the evolution of transistors. Over time, they’ve gotten so tiny that they sound almost like it’s impossible that they exist. A good example is the recent announcement by MIT researchers that we’re now capable of fabricating atomically thin transistors.
To put that into perspective, in well under one hundred years, we’ve jogged along from centimeter to millimeter and so on, until now… we’re atomic. As drones have progressed along the timeline, they’ve gotten smaller, more accessible, and more impressive. This means, we’ve progressed from hobbyists and military R&D being the primary players in the drone sandbox, to businesses and other entities employing them for more applications than we have the space to name.
For a bit more context, we can compare the size of the space in terms of growth to that of the military drone space. By 2025, the revenue in the commercial drone space will outpace military drones. From what we’ve read, commercial drones are going to come down on the global supply chain like a hurricane. Advancements, and things like e-commerce partnerships and successful testing with essential supplies in emerging markets, seem to be ushering in the age of the commercial drone.
An important part of the come-up for commercial drones is what’s known as last-mile delivery. Consider this… currently, if someone orders a new fishbowl, it has to go from the warehouse to the delivery mechanism (a truck or bike, for example), and then that last stretch is the package getting to the doorstep. That last step is the “last mile”, and it’s the biggest headache ever. We all know the struggle, you order it, track it… suddenly, it’s not on the doorstep like the phone ping said.
Funding for the space may soon start to look like they’re the guy standing in the see-through cash booth where you catch as much as you can and just grin. Maybe that’s a bit much, maybe not. Logistics aren’t exactly pretty right now, and we haven’t exactly set up the ideal conditions for the continuity of the current logistics infrastructure. At least, not as far as we can tell. But, we’ll not digress…
Here’s a good example of the funds coming in: FAA grant monies. The FAA recently awarded $2.7 million in funding earmarked for research into drone use in disaster response efforts. The funds were the third of an installment of FAA grants from a program called the Alliance for System Safety for UAS through Research Excellence (ASSURE). The UAS part stands for Unmanned Aircraft Systems, but we like just saying drones.
So… what about companies where the funding is blowing around? Full disclosure: my IPO Edge subscribers already know Draganfly (DFLY), which we got into way back in 2021 at a lowly $0.48 per share. We rode that wave to $1.17 and even now after the long and brutal bear market there’s still plenty of tangible profit there. Check it out!
And now the buzz is circulating around drone logistics firm called Zipline. In June of last year, the company was awarded Part 135 air carrier certification. That means they’re now allowed to make long-range, on-demand drone deliveries in the United States. They have reason to brag too, they got it under an FAA program established in 2020 called BEYOND, and they were the first to do so. The program focuses on rules, performance data, community concerns, potential use cases, benefits, and streamlining approval processes.
Zipline isn’t a struggling little start-up… as of last month, their valuation stood at $4.2 billion. According to emerging information, they just priced a $330 million Series F funding round, which contributed to the fattening of that number. You can certainly color us impressed, that’s quite the chunk of change for drones. It certainly gives us an extra supporting data point for the emerging picture of commercial drone proliferation rushing faster down the pike.
Numbers don’t lie, the numbers say that’s a nice increase from their already impressive $2.7 billion valuation just a few short years ago… oh how quickly a rise can happen when the conditions are right, and it’s a beautiful thing to see. Now, that number could toddle just a hair due to possible funds that could still be rolled in, but the numbers are in the low millions. When we’re talking about billions, a few million is a plop in the bucket.
Seems the lead investor is invisible, because (as of this writing), nobody had been able to dig that information up. What we did get, though, is the words “new home delivery service” from a cute little statement they provided some journalistic inquisitors when asked. As soon as we read it, we won’t lie… little Ben Franklin notes started dancing before our eyes. Getting packages to land on doorsteps safely, every time, is a most painful problem to solve.
Historically, names like Andreessen Horowitz, Katalyst Ventures, and Sequoia have chipped into funding rounds. With the company recently announcing an autonomous drone platform called Platform 2, it makes us curious what tricks they have up their sleeves… this drone is supposed to be able to carry eight pounds of cargo to a range of 10 miles, which tells quite the story when you pair it with the fact that most e-commerce packages come in at a slight five pounds or less.
It got our gears turning… we know of a huge, perfectly manicured new Amazon warehouse that isn’t staffed yet, for what looks like no good reason. This is strictly our imaginations running wild with us, but what if someone gets this right and it revolutionizes how places like Amazon and Walmart do business. We have the strategically placed warehouses… could commercial delivery drones signal the final push to “go”? Come back next week, we’ll have more from the IPO space.