Germany and Switzerland drone industry

How Germany and Switzerland became hot hubs for the drone industry

Germany and Switzerland are certainly known for their fancy cars, chocolate and watches, but the two neighboring countries deserve to be recognized for their finely-engineered drones, too.

Expect “Made in Germany” or “Made in Switzerland” to grace more drones in the future as both countries lead the pack when it comes to receiving some of the most investment capital of any countries, developing world class technology and playing host to top-tier drone companies.

Drone analytics firm Drone Industry Insights (which itself is based in Germany) compiled data around the two countries’ drone market size, number of drones out there, total investment funding and more to paint a picture of two thriving countries when it comes to drone innovation.

Germany Switzerland drone industry insights

So how did Germany and Switzerland grow to became such hot hubs for the drone industry?

Tons of drones are flying

A huge component of Germany’s success is that the country simply has a critical mass of drones in the air, with an estimated 430,700 drones in the hands of pilots. About 11% of those drones are commercial drones, but those commercial drones account for 87.86% of the total drone-related revenue in the country.

The story is even wilder in Switzerland, which has more drones per person than Germany. There are an estimated 56,000 drones out there in Switzerland, which is a fairly signficant percent given the country’s population is only about 8.5 million. And much of that is commercial drone use, which accounts for 96.64% of the country’s drone-related revenue.

Wingcopter coronavirus hackathon
A Wingcopter drone with its winch dropping mechanism

Germany has buzzing drone startups

Most of Germany’s drone companies are still relatively young and small, with an average of just 5.6 years and an average of just 17 employees. Most are concentrated in the states of Bavaria, Nordrhein-Westfalen, Berlin, and Baden-Württemberg.

And what do those companies do? The overwhelming majority (79%) are focused on providing drone-related services. As for the rest? 15% are drone hardware companies and 6% do software.

Its companies have a penchant for pushing industry standards, such as Hamburg-based Airial Robotics, which is building a drone that exceeds current industry standards in terms of flight time, payloads, range, speed and efficiency. That company is also a semifinalist in the 2021 GENIUS NY business accelerator program.

Germany has a strong drone delivery presence, with one particularly interesting company: Wingcopter. Wingcopter builds eVTOL drones (vertical take-off and landing), which presumbaly combine the advantages of multicopters (takeoffs and landings in tight spaces) with fixed-wing airplanes (fast and efficient forward flight). Items delivered via drone are lowered through a winch mechanism, thus requiring no landing infrastructure. Wingcopter was named a finalist in the third annual AUVSI XCELLENCE Awards 2020 and is also considered a Technology Pioneer by the World Economic Forum.

Switzerland is home to some major drone companies

A huge component of Germany’s success is that the country simply has a critical mass of drones in the air, with an estimated 430,700 drones in the hands of pilots. About 11% of those drones are commercial drones, but those commercial drones account for 87.86% of the total drone-related revenue in the country.

Like Germany, most companies focus on drone services (86.8%), while drone hardware companies account for just 10.4% of the industry, and software an even smaller 2.8%. Among the top drone service providers is Flyability, which recently opened an office in Denver Colorado as well and focuses on using drones for indoor inspections.

Another huge Swiss drone company is Auterion, which is the largest open-source drone software platform in the world, providing enterprise and government users with an ecosystem of software-defined drones, payloads, and third party applications, designed for use within a single platform based on open-source standards. Its customers include GE Aviation, Quantum Systems, Freefly Systems, Avy, and the U.S. government. There’s also Pix4D, which is known for leveraging drones for photogrammetry.

And Swiss companies are also primarily startups. 60% of Swiss drone companies were founded in the last 5 years.

An experimental Volocopter drone flying for the first ever public crewed test flight of a fully electric vertical take-off and landing (eVTOL) air taxi in the US at EAA AirVenture in Wisconsin.

Germany and Switzerland have raked in millions of investor dollars

It’s a lot easier to grow a business when you have money. And businesses within both countries have done an excellent job piquing investor interest, with Germany receiving a total of $747 million in investor funding since 2012. That makes Germany one of the top countries in the world for drone investments. In fact, it’s ranked number one in absolute terms within Europe (and number nine per capita).

For example, Volocopter, which was founded in 2011 in Bruchsal, Germany, just received $241 in Series D funding in February. Volocopter specializes in the design of electric multirotor helicopters in the form of personal air vehicles, designed for air taxi use. 

And despite Switzerland’s small size, the country has received $215 million in investor funding since 2010. When judging it per capita, Switzerland is actually number one in Europe (or number four in absolute terms).

All that funding means that, as of summer 2021, investors value the German drone market at $996 million, while the Swiss drone market is worth $476 million.

Both countries have a strong pipeline from colleges and universities

Innovation is at the forefront of the growing drone industry, and much of that innovation can be attributed to an emphasis on education and university research. Switzerland’s two big universities, ETH Zurich and EPFL, both have a strong culture of research and innovation, leading to the surrounding cities of Zurich and Lausanne to become big drone hubs as they hire interns — and ultimately employees — out of those schools.

Local government support is strong

It also helps that the government has — by and large — supported drone innovation more so than it’s created laws clamping down on it, which is sometimes the case.

For example, back in 2020, the German government osted a coronavirus hackathon, with €24 million in prize money (that’s about $26 million) on the table to startups that could help tackle COVID-19 related issues. German drone delivery company Wingcopter, UNCEF and the African Drone & Data Academy together were named one of the nine winners for their medical supply drone delivery system. That hackathon was run by the German Ministry for Economic Cooperation and Development to “solicit innovative digital solutions to tackle the challenges caused by the coronavirus outbreak in low- and middle-income countries,” with funding from supporters including the European Commission (through EuropeAid), the Bill & Melinda Gates Foundation, Technical University Munich, and others.

And then just before that, there was the mFUND under The German Federal Ministry of Transport and Digital Infrastructure. That fund supports digital business ideas, and actually gave additional funding to Wingcopter for a particular project to test how drones can deliver samples in a trial with pharmaceutical giant Merck Group.

Over in Switzerland, the government has hosted ASTM tests around electronic drone license plates, where select drone operators in Switzerland (including drone delivery company Matternet) can request automated and manual flight authorization to fly in airspaces in the cantons of Lugano and Geneva through the skyguide U-space mobile application.

Last summer, the U.S. Federal Aviation Administration and the Swiss equivalent of the FAA, the Switzerland Federal Office of Civil Aviation, announced a partnership to work together to build domestic and international safety standards for drones.

There are also strong, local drone associations

A lot of the countries’ growth can be attributed to lobbying efforts and support from VUL, short for Verband Unbemannte Luftfahrt, a group seeking to promote the creation of uniform rules and standards for the safe operation of unmanned aircraft systems at the international, European, and national levels. 

The Berlin-based VUL is a joint initiative of the German Aviation Association (BDL) and the German Aerospace Industries Association (BDLI). 

“The formation of these drone associations is a good sign of a vibrant drone industry where drone companies have progressively established themselves in their national markets,” according to a report from Drone Industry Insights. “By flourishing, they have given rise to drone associations which allow industry leaders to spread awareness of the benefits of drone technology and acquire more financial support for various projects. This has clearly boosted commercial drones in Germany and Switzerland.”

A rendering of a Lilium drone prototype.

What does the future hold for Germany and Switzerland’s drone markets?

In short, the future looks likely to hold growth. Germany’s drone industry is expect to see a compound annual growth rate of 14.5%, while Switzerland is expected to grow at a compounded annual rate of 10.6%.

What’s encouraging is that — while both countries are expected to see declines in the recreational drone use side — both are also expected to see significant growth in the commercial side.

And most drone industry experts agree that the commercial drone industry is where the money is at.

As far as what to keep an eye out for: regulations. In Switzerland, one of the hot topics is ratifying regulations EU 945/EU 947, which could affect how companies test their drones and services before bringing them to market.

And here’s something literally uplifting: passenger drones. Germany is home to a couple flying taxi startups, including Volocopter and Lilium. Both companies are working to build drones capable of carrying people — no pilot necessary.

Lilium, which was founded in 2015, is looking especially hot lately after announcing a deal in March 2021 with Qell Acquisition Corp, valuing it at $3.3 billion.

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