Record drone investment finally ends in 2022 — but that’s not a bad thing
For every single year since 2017, investment in the drone industry has continuously topped fresh records. That is until 2022, when the hot streak of record drone investment finally ended.
That’s according to fresh data from Drone Industry Insights, a German-based analytics firm. The group has been tracking drone industry investments since 2013. And between 2013 and 2022, only two years have broken otherwise-growing record streaks: 2017 and 2022.
While venture capital investment in 2017 topped every single year prior, IPOs (Initial Public Offerings) and PIPE (Private Investment in Public Equity) couldn’t make up for it, resulting in overall 2017 investments failing to top 2016 records. And 2022 was no match for the record investments set in 2021. Both venture capital value and IPOs in 2022 were sharply lower than 2021. In fact, they were an incredible 39% lower.
But here’s why you shouldn’t be too concerned: 2022 capital pouring into drones still far outpaced that for 2020, as investments directed toward drones still exceeded $4.8 billion. And in fact, the $4.8 billion overall investments that poured into drones in 2022 is still more than the total money poured into drones in the years 2018, 2019 and 2020 combined.
And for what it’s worth, any scenario where 2022 could break 2021’s records would have been a tall order. Drones, like many aspects of tech, exploded in 2021 after — past the initial panic of the COVID-19 pandemic — investors saw an opportunity for drones to usher in a new, digital-first era.
Of course, it’s also important to note that the 2022’s failure to mark another year for record drone investment does not mean that there was a shrinkage or loss of drone industry investment in any way. After all, investors still see room enormous growth — enough to dump $4.8 billion in additional funding into drones last year.
“A year-to-year decrease is far from a reason to worry or sound the alarm about the attractiveness of investing in drone technology,” according to a memo from DII. “The record-breaking path may be over, yet the healthy growth of the drone industry through investments continues, and will likely remain that way in the coming years.”
What sort of investments did the drone industry receive in 2022?
Drone Industry Insights has a fairly broad classification of what counts as drone industry, counting many facets of drones including hardware, software and service, but also including eVTOL passenger drone companies into the mix.
DII registered 179 investment deals in the drone industry in 2022, totaling $4.8 billion.
Most investments were directed at companies based in North America, with companies on the continent representing 51% of all drone investments in 2022 (though, that’s down from the 64% share North America took in 2021). And within North America, most of that money is pouring into the U.S. In fact, 40% of all funding went to the U.S.
And as is usually the case, most investment was allocated to hardware drone companies, accounting for 84% of the overall funds. Software companies received $534 million, which is more than double the $210 million taken in by drone service companies.
Why was 2021’s record drone investment so massive?
Investments in drones through 2021 amounting to nearly $7 billion in combined value across 199 investment deals involving a drone company, according to DII. That’s nearly triple the $2.4 billion in drone investment deals recorded in 2020, which at the time was a record-breaking year on its own.
Certainly overall COVID-19-related investment in tech led to an exponential increase in drones. With folks staying at home, drones could deliver food and medications. They might deliver PPE. With a shortage of workers, drones could replace delivery drivers.
But 2021 drone investment was especially high for another big reason: massive investments (particularly IPO/PIPES) in eVTOL companies. And one of the most significant of those eVTOLs is Joby Aviation, a passenger drone company promoting the concept of air taxis via a five-seat electric vertical take-off and landing aircraft.
And it’s also the single largest driver of drone-related IPO/PIPES in 2021. The company went public on the New York Stock Exchange in August 2021 under the ticker symbol “JOBY,” after completing a merger with special purpose acquisition company Reinvent Technology Partners. Prior to that, the company had received backing from big mobility players including Toyota and JetBlue.
Another big eVTOL company to take in money was Beta Technologies, which raised $511 million over the year — the highest amount of money in terms of venture capital investments in 2021. The 300-person, privately held company headquartered in Burlington, Vermont is developing electric vertical take off and landing aircraft for the cargo and logistics industry, as well as autonomous delivery aircraft.
And the highest-grossing single PIPE deal went to Archer, which is a Palo Alto-based company working on sustainable air mobility to transport people around cities via an electric vertical takeoff and landing (eVTOL) aircraft. Archer claimed $857.6 million as part of its combination SPAC deal with Atlas Crest Investment Corp.
If 2021 was so record-setting, when did 2022 investments fall off?
According to Drone Industry Insights, investment deals started to slow down in May 2022 — not long after Russia invaded Ukraine and commercial drones were reportedly used in warfare.
DII also reported a decline in Mergers and Acquisitions (M&A) in 2022, citing 40 deals versus the 47 registered in 2021. But according to DII, the decrease isn’t actually that noteworthy, especially given that the number of partnerships massively grew from 193 in 2021 to 270 in 2022.
“The majority of these partnerships (74%) were between drone companies and non-drone companies, which once again is a strong sign of how drone technology can support work activities and operations in many other industries,” according to a DII memo. “In other words, the drone world isn’t a closed ecosystem of drone companies working only with each other, but rather a multi-industry of companies working to achieve their goals more efficiently.”
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