Funding for drone-based startups has hit an all-time high this quarter for the third time in a row and the lucrative market shows no signs of slowing down.
According to CB Insights, drone companies have raised over $US300 million in funding this year, with $US139 million of this coming from the third quarter.
This record amount is on the back of a number of significant investments in large starts, including $US60 million for Chinese drone manufacturer Yuneec, a $US42 million series B round for EHANG and a $US22 million round for SkyCatch.
The majority of these VC-backed startups are focused on software and services or hardware, accounting for more than 80% of the drone market.
The report also identifies key areas of opportunity for drone startups, including agriculture and delivery, both services that Aussie startups are making great headway in.
Drone delivery company Flirtey is leading the way in Australia and is rapidly expanding abroad, having recently worked with New Zealand’s national search and rescue operation and completed a delivery in the US.
The report says that although drone delivery is yet to be picked up in the mainstream, mainly due to strict regulations, it’s an area of immense opportunity, with the courier and local delivery market worth $US97 billion in the US alone.
On the agriculture side of things, Propeller Aviation is pioneering the use of drones in agriculture for surveying with 3D images.
This form of precision agriculture via drones can be effective in increasing the efficiency of crop yields, mitigating many risks and lowering the overall costs, according to the report.
However, a mixture of slow regulations and lack of necessary infrastructure is threatening to stunt the growth of the drones market.
FF Venture Capital partner John Frankel is quoted in the report and sums up just how big the drones startup industry can be.
“It’s blindingly obvious to us that this is going to be a big space,” Frankel says.
“It’s tough to know how big it will be, but from where I stand on the foothills I can see the mountains in the distance and they’re pretty high.”
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Denham Sadler is a freelance journalist based in Melbourne.
