18 months ago, it looked like funding for drone companies was on the rise. 2014’s fourth quarter funding was up 104% year-over-year, with news about the FAA’s then-proposed rules allowing commercial drone flights (now known as Part 107), supposedly bringing investor confidence to commercial drone applications.
Between 2010 and 2012, there were fewer than five venture-capital deals with drone companies, according to CB Insights. In February 2015, there were at least 10 companies with Series A funding or more. The top 5 most well-funded drone startups were Airware, 3D Robotics, X Aircraft, Skycatch and Cyphy Works.
Financing for drone companies fell 59% year-over-year in the third quarter, and 48% from the previous quarter. The drone industry’s numbers were starker than for venture-capital funding overall, in which funding dollars fell 39% from the same quarter in 2015 and 14% sequentially.
There was $55 million invested in eight VC deals for the drone industry in the third quarter, compared with almost $106 million invested in 13 deals in the second quarter. In the third quarter of 2015, $134 million was invested in 12 drone-related companies, part of a banner year for drone startups.
This year has seen the drone industry establish winners and losers. 3D Robotics laid off more than 150 people and burned through almost $100 million in venture-capital funding, according to Forbes. Meanwhile, drone maker DJI is valued at $8 billion and controls 70% of the drone market, according to Forbes estimates.
“In 2015, everyone was super-hyped about drones,” said Alex Niehenke, an investor at Scale Venture Partners. “We’re now starting to see the leaders emerge.”