Every year, the team at Drone Industry Insights analyzes the drone market with topics ranging from drone applications to regulations, company rankings and global trends. And out of all these topics, one has persistently highlighted the potential of drone technology over the past years: drone investments. The amount of investment that drone companies have received each year is a sign that drone technology is indeed the future and the latest Drone Investment Database provides all the data to support it.
Investments growing potentially
Even before the pandemic started, drone investments started having an exponential increase. In 2019 the total amount of investing that went into drone companies was US$1.3 billion, which then doubled to just under US$2.4 billion in 2020. And then in 2021 this amount has reached almost US$7 billion, meaning that it almost tripled from one year to the next. These three consecutive years of record-breaking investments tell us that drones are on the way to a multibillion global industry. In other words, the hype is over and the trust in drone technology is real.
The three types of products that drone companies offer can be broken down into hardware, software, and services. Out of these, the type that received the lowest amount was software with US$ 639 million, followed by service providers with a much higher amount of US$ 1 billion. This was a quite significant growth for service companies that received a more humble US$ 160 million in 2020. Their substantial growth in investment was led by drone services, which made a lot of headlines over the course of the year. Meanwhile, the highest amount of investment was into drone hardware, reaching US$ 5 billion globally. How did these reach such an astounding amount? The answer is very clear: passenger drones (also referred to as eVTOLs or air taxis).
Air mobility gearing up
Out of all industry verticals, passenger drones received the highest amount of investment in 2021. Their total value amounted to US$4 billion, which essentially quadrupled from 2020’s total of US$ 1 billion. Additionally, passenger drones were the top 4 investments in the form of an Initial Public Offering (IPO) or a Private Investment in Public Equity (PIPE). These saw a total investment value of US$ 2.63 billion, and the highest single deal from this category was Archer Aviation, with US$ 857.6 million as part of their business combination SPAC deal with Atlas Crest Investment Corp (though Joby had a larger cumulative total for the year).
All the investment money that has gone into these companies is both a sign of the excitement about “flying cars” as well as the expectation and pressure for these to deliver. As we get closer to the projected date for takeoff (2024), these companies will receive more attention, more investment, and experience more competition to see which will be first to market.
Finding partners and joining forces
Of course, no company can carry the industry forward alone (not even DJI). That is why we also saw an increase in both the number of mergers and acquisitions (41) as well as partnerships (190). Both on these are an increase from last year, and a vast majority of partnerships (77%) were between a drone company and a non-drone company. The most common type of drone company to complete partnership deals was companies working on drone delivery. These were also one key reason for the aforementioned growth in investment for drone service providers. Drone delivery companies partnered with companies that produced or distributed several goods, particularly medical ones (e.g. COVID tests and vaccines). It is likely that this trend of a high number of partnerships by drone delivery companies will continue since drone deliveries represent a rather adaptable service for hundreds of different types of products.
The second type of company to achieve partnerships were those dedicated to UAM/AAM. Much like drone delivery companies, these provide high logistic value and we can expect many more of these to find partnerships in the coming years. Moreover, we should also expect drone companies to continue to partner with non-drone companies so that each can benefit from the other’s expertise or client base. Drone companies benefit from the expertise and network of companies outside the industry while these in turn benefit from the niche knowledge of unmanned aerial technology.
In conclusion, we saw exponential increases in investments (especially passenger drones) as well as mergers, acquisitions and partnerships (with very high activity by drone delivery). With all of this in mind, it is also worth considering that investment on UTM companies increased to US$ 38 million (more than doubling from US$13 million last year). In other words: we are seeing substantially more preparation for a more occupied airspace. How this will develop in practice will of course depend on regulation, but it is reassuring to see that several regulatory bodies across the globe are indeed starting to give more importance to drone regulation. For now, one key takeaway is that commercial drones around the world are receiving both the media attention and the financial investment to move their projects forward and another takeaway is that the high level of investments reflects trust in the drone industry as scalable for business and able to generate solid revenue.
Investment database: https://droneii.com/product/commercial-drone-investments-database
Droneii blog: https://droneii.com/drone-investments-in-2021-break-records
Droneii and ADW Hybrid
Droneii will share their latest insights during ADW Hybrid Tuesday 29 March 12.30 CEST at the ADW Xpert Theatre. For more information visit: https://www.amsterdamdroneweek.com/amsterdam-hybrid/