Drone-company funding may jump on FAA decision

The following piece is an excerpt from an article I wrote for MarketWatch.com. Read the entire story here.

The Federal Aviation Administration unveiled new proposed rules this week for the operation of commercial drones.

Until now, the use of drones was essentially banned unless the operator applied for a Section 333 permit, which requires a licensed pilot and a cumbersome process of about 120 days.

Under the new guidelines, drones could legally fly for commercial purposes if they travel below 500 feet during daylight hours and within sight of the operator, and as long as the pilot is age 17 or older and has passed a written test.

The rules would “provide probably the most flexible regime for unmanned aircraft, 55 pounds or less, that exists anywhere in the world,” FAA Administrator Michael Huerta said on a conference call on Sunday.

And with more flexible rules regarding commercial drones, some predict funding for drone startups will skyrocket. Funding for such enterprises has already increased 104% year-over-year, according to data from CB Insights.

CB Insights

 

“The time is now for investors to allow the drone industry to grow, especially drone-integration companies focused on providing whole solutions for organizations unfamiliar with the market,” said Vinny Capobianco, the co-founder of Flyspan Systems, a drone startup that provides systems-integration services.

Capobianco’s company is among the recent explosion of startups focused on advancing drones. Capobianco has spent the past year working on the commercial side, including projects that involve film, security and agriculture. His company recently opened a seed round of funding.

“A new age of aviation has begun that will accelerate rapidly over the next few years,” he said.

Between 2010 and 2012, there were fewer than five venture-capital deals with drone companies, according to CB Insights. Now, there are at least 10 companies with Series A funding or more.

“We’re clearly at the very beginning of a really big commercial opportunity. I’m not sure that we see unleashing of demand in the wake of the FAA’s proposed regulations. Rather, the demand for commercial uses seems like something that will steadily grow in the coming months and years,” said Eric Norlin of SK Ventures, which has backed companies such as drone manufacturer 3D Robotics and aerial-robotics platform Skycatch.

CB Insights

 

The world’s largest drone manufacturer, DJI, which generated 2013 sales of $130 million, said it is in talks with new investors for funding, according to a Bloomberg News report. The Chinese drone maker said its sales tripled last year and that the company is worth “significantly more” than the $1.6 billion valuation it received last year.

The following piece is an excerpt from an article I wrote for MarketWatch.com. Read the entire story here.

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