From Unmanned Systems Magazine: Good teams, good strategies, compelling tales: Successful startups describe their strategies
With technological advances emerging nearly every day, companies in the unmanned systems industry are competing to build better, stronger, faster, more agile machines for every type of customer, from governments to businesses to consumers. The technology is becoming more affordable and accessible, making the UAS industry one of the most dynamic, unpredictable and exciting marketplaces on earth.
Now more than ever, the path to competing in the market is paved with opportunity. As more countries have developed regulations allowing drone operations, and as more industries have created standards for the use and incorporation of unmanned systems into business functions, widespread adoption is racing ahead.
However, even with these regulations opening the door to more opportunity, UAS start-ups still experience both the benefits and risks of a dynamic market.
Fail or fly?
What does it take to build a drone business? Very little, now that a drone is so easy to obtain and licensing is less rigorous. But what does it take to build a leading, innovative UAS company? An excellent team, good strategy, persuasive presentation and slide stack, compelling story, or the capacity to implement and iterate? How about all of the above? And even then, success may be elusive.
Those factors, along with landing in the market at the right moment, can make the difference. One start-up, Flyability, has struck while the iron is hot. As most users struggle to ensure their drones don’t land in the trash heap, Switzerland-based Flyability has taken a leap ahead to make them more durable. It builds safe UAS for operating indoors, in complex and confined spaces. Their models can be used in cities, buildings and environments where there’s contact with people.
“We started with a simple and pragmatic idea — build a collision-tolerant UAV to be able to use it in the most complex, confined indoor spaces,” explains Patrick Thévos, company cofounder and CEO. “The market was there, and the timing right, and this simple approach allowed us to get to market really fast.”
He notes that ease-of-use is the future of UAS and that robustness is a necessary component.
“When UAVs will be used in every plant on the planet for inspection needs, it is obvious that they are not going to be operated by expert FPV [first-person view] racers, but rather by professional inspectors and maintenance specialists,” Thévos says.
Being first to market presents new and unique challenges, as Flyability works in an ambiguous world of unknown factors.
“Pricing, business model, go-to-market, target markets, etc.; we had to start from scratch on most of those topics, experimenting and iterating. Also, we have been working hard to educate the market,” says Thévos.
Founded in Toronto, Canada, but based in Raleigh, North Carolina, PrecisionHawk is a civil unmanned aerial system and remote sensing company focused on data collection and management. CEO Michael Chasen believes it’s their selection of end-to-end solutions that meet customers “where they’re at” that sets Precision Hawk apart.
“We help them select drones, write custom software, provide certified pilots, and help them plan. On the other end of the spectrum, we have large companies that ask us to just fly drones and get the data,” he says.
Chasen notes that a continuous challenge is being at the cutting edge of an industry in its infancy. On the one hand, there’s off-the-shelf technology that makes just about anyone a UAS pilot. On the other hand, there is constant innovation.
“When we’re dealing with our enterprise clients, we’re at the leading edge of what we can do,” he says. “A lot of times, these are things being invented.”
PrecisionHawk recently completed beyond visual line of sight research for the Federal Aviation Administration that focused on the development of operational and safety practices, as well as recommendations for technologies that enable drone flight beyond visual line of sight. Chasen says, for example, that technology will allow UAS to identify aircraft by sound.
“Once incorporated, this will be a safe way for drones to fly beyond line of sight,” he says.
A company focused exclusively on the question of flight beyond visual line of sight is Iris Automation, one of the global leaders in collision avoidance technology for commercial UAS. CEO and cofounder Alexander Harmsen says he believes the company’s narrow focus on a key factor for the future is what sets the Toronto-born, San Francisco-based company apart.
“From the beginning, we’ve tried to focus on one very critical, hard-to-build system. … As many different requests as we receive, we’ve focused on this one innovation.”
Harmsen sees talent management as the biggest challenge and a critical factor in Iris Automation’s success, and points to the importance of the role the team plays. The leadership spends considerable time recruiting, interviewing and sourcing candidates to ensure cultural fit.
“We’ve set a very high bar for new team members to join Iris Automation,” he says. “We’re looking for extremely smart, curious people. When we finally do find them and convince them to join, it makes the team better.”
And, he notes that managing the team has changed as the company has grown from five to 25 employees, as well as the effort it takes to maintain the culture that fuels their success.
“Communication changes a lot. People join as one of the first five, and a year or so later it can be 20 or more people, and there’s middle management and not everyone is in the loop anymore,” Harmsen explains. “You have to be very intentional about communication and how decisions are being made.”
What investors want
Each company — Flyability, PrecisionHawk and Iris Automation — has successfully navigated multiple rounds of funding. Iris Automation won the competitive Y-Combinator and raised $10 million. PrecisionHawk just raised $75 million in January, bringing their total funding to more than $100 million since launching. And Flyability has raised 6.5 million euros (more than $7.6 million).
Flyability’s Thévos sees funding as a series of stages.
“At the first stage, we found that investors are looking for a team, a prototype and a sizeable market potential,” he says. “If we succeed, then at the series A, it's about having the first sales and traction. Then, it quickly becomes about numbers — revenues, margin, etc.”
Both PrecisionHawk’s Chasen and Iris Automation’s Harmsen see their teams as keys to success in an exciting market where investors are looking for big ideas.
“What helped us raise money is that there is this growing market, but we really have a great team and marque clients,” says Chasen. In addition, Harmsen notes, “It makes sense that drones should avoid one another. But, I think ultimately we’ve had a compelling story and strategy — not just the idea, but the execution.”
An exciting, dynamic market brings opportunity, but also the pitfalls of broader competition, making investors in the UAS industry more focused on innovations. When everyone can buy a drone and a photography payload, a company has to bring more to the table than a new iteration on something that already exists.
The market is “growing very quickly,” Harmsen says. “It’s not about supplanting existing revenue, it’s about bringing unique things to the market.”
Chasen predicts there’s still much more to come in the UAS space.
“It’s a good market, but it’s very, very early. We know it’s going to be huge. We know it’s amazing technology. There’s still a lot to figure out about how this all fits together.”
And Thévos highlights what every entrepreneur must learn — to plan, exercise patience and be prepared to pivot. “[It takes a large amount of] resources … to get a reliable product to market. … Being optimistic is, however, a required skill to become an entrepreneur.”
Above: A Flyability Elios prepares for a mission. Photo: Photo: Flyability (www.flyability.com). Below: A drone equipped with Iris Automation’s sense-and-avoid system. Photo: Iris Automation