drone startups venture capital

Drone startups aren’t getting the funding perhaps we all anticipated

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.

Today, the drone landscape has dramatically changed.drone funding 2016 falling

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.”

Read the rest of this story on MarketWatch.com.

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