Airware bankrupt shutting down

Airware shuts down after burning through $118 million in venture capital

One of Silicon Valley’s most heavily funded drone companies, Airware, has crashed.

Airware, a San Francisco-based drone startup working on operating systems, is ceasing operations immediately.

“History has taught us how hard it can be to call the timing of a market transition,” according to a blog that was posted Friday on Airware’s site. “This is not the business outcome we had worked so hard for over the years.”

The news was first reported by Tech Crunch, which shared screenshots from the Airware alumni Slack channel detailing how the staff was told that the company would shut down.

The news appears to have come across as unexpected even to former employees, garnering comments such as “holy moly,” “didn’t they just announce some new partnerships?” and “how do I get my options sent to me on paper so I can burn them all in a fire.”

Airware had once been seen as one of the drone industry’s darlings, after having raised $118 million from big investors such as Andreessen Horowitz, Google’s GV, and Kleiner Perkins.

The company went through a series of business transitions, having launched in 2011 as a company to make autopilot systems. It then transitioned to building entire drones, and later pivoted to a company that would consult other companies on enterprise applications.

Airware at one point launched its own drone investment fund called the Commercial Drone Fund, which claimed would make investments of between $250,000 and $1 million in promising startups. That fund ultimately invested in three companies, according to Crunchbase: Redbird (which it eventually acquired), Cape and Raptor Maps.

According to Airware’s own blog post, they were “pioneers in this market and one of the first to see the power drones could have in the commercial sector.”

But for others, the news may be less surprising. The company had also struggled lately to keep up with other startups in the drone sector. Airware had been absent from recent, big FAA decisions, such as the UAS Pilot Program, which gave favor to other startups such as Airmap and Flirtey, or the LAANC program, which has seen progress from startups including Airmap, Kittyhawk and Skyward.

The news also illustrates the challenges of competing against behemoth DJI in the hardware development sector, as well as competing with small startups and even individual consultants in the increasingly crowded space of enterprise consulting operations.

Chinese drone manufacturer DJI has repeatedly dominated the lower-tier prosumer drone market, as well as the enterprise market with robust drones that offer thermal cameras, zoom lenses and are deeply integrated with enterprise software. DJI has a conservatively estimated 70% market share, but that number could continue to grow if the trend around major companies like Airware calling it quits continues.

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