Why 2020 drone investment hit a record high — despite COVID
Despite a pandemic, 2020 drone investment marked a record high in terms of investment per year in drone companies. The global drone industry is on a tear — and not even COVID can stop it (and actually the pandemic might have helped it in some ways).
Investment in the global drone industry hit a record $2.34 billion in 2020, according to the latest report from German-based drone research firm Drone Industry Insights. Not only is that number enormous on its own, but it’s almost double the amount invested in the previous year (almost $1.3 billion invested in 2019) which had already been a record on its own.
What was mostly responsible for the huge 2020 drone investment growth?
Primarily hardware. The drone hardware segment really took off in 2020, accounting for about $2 billion of the total $2.34 billion invested across the entire drone industry. And by hardware, we’re not talking about kitschy innovations on consumer-focused drones (sorry, egg-shaped drones) — though 2020 still had that type of hardware growth too.
A huge chunk of investment went to passenger drone manufacturers, taking in $1.025 billion in investments. And of that, a huge chunk went specifically to Joby Aviation, which is perhaps best known for having acquired Uber Elevate in December 2020. The Santa Cruz-based company was founded in 2009 and has received $820 million in funding, with a $6.6 billion valuation.
“The record investment into passenger drones means that perhaps we will indeed be flying around in drones by 2024,” DII predicted in a memo.
Another huge sector for investment was in counter-drone hardware. For example, San Francisco-based anti-drone technology startup Dedrone announced that it received $12.1 million in a funding round led by European technology investor TempoCap in winter 2020. DII research indicates the counter-drone market could be worth $6.6 billion by 2024.
Other sectors generating growth in the drone industry
Hardware is easily the biggest driver of drone industry investment lately. But drone services and software are till growing too. While both drone services and software saw fewer overall investment dollars in the year 2020 versus 2019, it’s still investment — which means growth.
“A decrease in drone investments doesn’t mean a decrease in their quality or profitability,” DII pointed out in its analysis.
In fact, drone software companies grew roughly 20% in 2020, meaning they likely increased their revenue and relied less on drone investors.
Read more: Want to invest in drones? These drone stocks are worth following
What record 2020 drone investment means going forward
In short, growth. More investment means more dollars being poured in the industry. In the short-term, that means more jobs as companies use much of the investment money to hire new personnel. In fact, drone companies increased their staff by 15%, on average in 2020, according to a separate DII analysis. And unsurprisingly, hardware saw the largest amount of hiring growth, up 18% from 2019.
Long term, that naturally means better products driven by better solutions. Drones with bigger sensors at lower prices. More options for drone small business owners. Room for more American drone companies to pop up.
“The data shows that drone investments continue to increase despite the devastating economic effects of the COVID19 pandemic,” according to DII’s analysis. “Many industries struggled and experienced layoffs. However, many also saw this as an opportunity to invest in the drone ecosystem and drone companies grew while the overall level of investing in drones almost doubled. Drones can optimize and, when necessary, substitute the work of humans, which is why they have taken off in all industries.”
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