$5B Investment, 129 Companies, 170 Craft

We’re in the middle of an explosion of innovation in drone technology. According to a report by venture capitalist at Phystech Ventures, there has been $5 billion of investment in drone technology in the past two years, leading to the development of no fewer than 170 different air taxi, cargo, and vertical take-off-or-landing craft by almost 130 different companies.

Also: air taxis are hype, not substance, he says.

“From my perspective, [the] air taxi topic is a little bit hyped,” Daniel Shaposhnikov, a partner at Phystech Ventures, told me recently on the TechFirst podcast. “Scalability for the cargo drones will be much closer.”

Why?

The air taxis might get the headlines and they might even get the investment dollars because they’re sexy and visual and exciting. But cargo drones solve a massive existing problem — last mile delivery — and they’re far easier to implement. A key reason: safety regulations for craft carrying humans in the air are much more onerous. And, the drone size you need to carry one to four people is easily an order of magnitude bigger than usable cargo drones in active service today. Plus, the fine-grained air traffic control you’d need for manned drones is a significant challenge.

That’s why, Shaposhnikov says, even on air taxi drone websites or presentations, you’ll see a cargo drone in the background.

When we think drones we tend to think electricity and batteries, but a full 35% of the drones under development have good old-fashioned internal combustion engines. Many have hybrid models, some use hydrogen fuel cells, and only three are shipping pure electrical systems today. Current batteries do not offer sufficient power density and cannot power long flights, Shaposhnikov says.

(Of course, there are in-flight recharging capabilities under development.)

As much hype and investment as we’ve seen, it’s still early days.

Only 13 of the 169 companies have actual shipping, orderable product to date. And while $5 billion in investment sounds big, many companies are struggling under tight development budgets because $4.6 billion of that has been raised by just six companies in the U.S. and Europe: Joby Aviation, Lilium, Paragon, Archer Aviation, Beta Technologies, and Volocopter.

However, there is a significant amount of innovation. And it’s all part of a global trend away from fluffy consumer technology — internet and apps — and towards deep tech, Shaposhnikov says.

Listen to our conversation:

AnchorDrone explosion: Cargo UP, air taxi DOWN by TechFirst with John Koetsier

“Globally, we see that the investment appetite is going towards deep tech companies. It’s not only the drones. So we will also see high growth of the level of interest for quantum technologies, for example, or deep artificial intelligence … and drones, they solve, let’s say, logistic or urban problems.”

What will we see in the next five years?

Shaposhnikov says we’ll see a large-scale deployment of drones for cargo delivery. He also thinks there will be heavy-payload drones to replace helicopters in high-risks scenarios, saying they are up to 10 times cheaper.

For air taxis, an operational future is at least six to ten years out, according to Shaposhnikov. There are outstanding engineering issues, aerodynamic issues, and safety issues. Batteries are still a problem, and there will need to be a significant amount of testing and regulatory compliance. Plus, we’ll need enhanced air traffic control systems for cities.

So the first systems might not actually appear in cities:

“I’m sure that we will see this kind of business inside cities, but of course, first routes of air taxi will definitely appear out of the cities … because it’s much easier,” Shaposhnikov says.

Get a full transcript; subscribe to TechFirst.

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