Unmanned technology is the future
Another year has passed, and investment in drones has once again reached new heights. 2020 and 2021 brought recession and uncertainty for various industries thanks to the pandemic, but they also gave investors a chance to put their money into the future. And the last three years of investment in drones have shown one thing very clearly: drones are the future.
We bring to your attention the final analytical information revealing the current development of the drone industry from one of the most influential people in the commercial UAV industry, as well as the co-founder of the leading analytical company Drone Industry Insights (DroneII), Kay Wackwitz.
The cost of investing in drones is doubling
In 2021, we registered 199 investment transactions involving unmanned companies. The total value of these transactions amounted to almost 7 billion US dollars. Compared to the previous year (2020: USD 2.4 billion), this means that the total investment volume has doubled compared to the previous year for the second year in a row, and this year it has almost tripled. Within this record amount, the value of venture investments amounted to almost 4 billion US dollars, and this amount can also be broken down by segments of the drone industry as follows.
Drone hardware companies received $5 billion in investment, also doubling year-over-year. The reason for this was another year of excitement and investment in passenger drone companies. These passenger drones received the largest amount of investment ($4 billion, double that of last year) compared to $1 billion from all other drone hardware companies combined. Drone software companies received $639 million, with anti-drone investment down year-over-year and investment in UTM companies up to $38 million (up from $13 million last year).
At the same time, drone service companies received US$1 billion, significantly more than last year (2020: US$160 million). The large influx of investments in these companies is not surprising, given the active activity in the field of unmanned delivery. As in previous years, the top regions attracting investment in value terms were North America, Europe and Asia, in that order.
Public offerings as an investment in drones
Other ways to invest in drone delivery are initial public offerings (IPOs) and private equity investments (PIPEs). The total cost of investments in them amounted to 2.63 billion US dollars, which is significantly more than 25 million US dollars in 2020. What’s more, 38% of total investment value in 2021 was IPO/PIPE, which means that more than a third of investments in drones were of this type.
It is worth noting that the main reason for such a significant increase in IPO and PIPE activity was an increased focus on advanced air mobility. The top 4 IPOs/PIPEs were all in the passenger drone sector, with the most profitable IPO/PIPE deal in 2021 coming from Archer, which raised $857.6M in a SPAC business combination deal with Atlas Crest Investment Corp (although Joby’s total investment was more). With many passenger drone companies planning to enter the market in 2024, we are likely to see a lot more investment in drones for enhanced aerial mobility in the near future, especially since the type certification they need is an expensive process.
In terms of venture investments, in 2021 the largest amount of funds was raised by Beta Technologies, which accumulated $511 million in a year.
Mergers, acquisitions and partnerships
Finally, let’s move on to mergers, acquisitions and partnerships. The number of mergers and acquisitions (M&As) in 2021 was 41, which also represents an increase from last year. Partnership activity has also increased. In 2021, we registered a total of 190 drone company partnerships. The vast majority of these (77%) were between drone and non-drone companies, which should provide a good opportunity for drone companies to benefit from the experience and network of companies outside the industry.
In this regard, it is logical that the most popular type of companies that entered into partnership deals was “drone delivery”, which complements investments in this sector. Drone delivery companies have partnered with companies that make or distribute medical supplies (such as COVID tests and vaccines), and we should expect this trend to continue. The second type of companies that achieved partnerships were UAM/AAM companies. Like drone delivery companies, they depend on the production of other goods for their services to provide logistical value, and we can expect many of them to find partners in the coming years.
About Drone II
Drone Industry Insights Service Portfolio:
That’s it, but if you’d like to learn more, including a list of all deals in 2021, investors, and a complete database of commercial drone investments, please visit the Drone Industry Insights website.