VesnaVentures

Industry and Investment Trends in UAVs August 15, 2018

Overview

Industry Landscape  Investor Trends Funding Pathways  Takeaways  

Rapid Growth

• Consumer drone shipments will reach 29 million by 2021 (CAGR 31.5%).

• Enterprise drone shipment will reach 805k in 2021 (CAGR 51%).

• DoD FY2018 budget request contains $6.97B for procurement, R&D, and system-specific construction.

Market Size and Growth

Market Size and Growth

Applications Reported Drone Usage in the US (FAA, 2017)• 34% photography • 26% construction and industrial

inspection• 26% real estate • 21% agriculture Energy and mining companies make 11%

of their total investments in drones. Power &utilities and industrial products make 7% of their total investments in drone tech.

Market Growth

Part 107 effective date08/29/2016

Part 107 published06/28/2016

Growing opportunities for service providers

FAA Registered Drone OperatorsUS

Top States

1. California 6. Illinois

2. Florida 7.   North Carolina

3. Texas 8. Ohio

4.   New York 9 Pennsylvania

5. Colorado 10. Georgia

0 1000 2000 3000 4000 5000 6000

Construction

Survey

Inspection

Real Estate

Aerial Photo

Business Applications

Looking Ahead

Market Segments for Service Providers

Large Market Players

DJI (Dajiang) Innovations (privately held) – Shenzhen, China70% of drone marketSeveral different product lines: Phantom, Spark, Zero Zero Robotics’ Hover Camera

AeroVironment (NASDAQ:AVAV)~$270M revenue Focus area: surveillance, tactical A leader in military drones, entering commercial space with QuantixRaven done model is most widely used small-scale drone in the world

Ambarella (NASDAQ:AMBA)2017 revenue $310 MFocus area: video Manufacturer of chip in GoPro camera Supplier for DJI

Large Market Players

GoPro (NASDAQ:GPRO)Focus area: videoMount cameras to consumer level drones (Karma series)Target audience: hobbyists, professionals, and adventurers

3D Robotics (Privately held) – Berkeley, CaliforniaFocus: high tech, autonomous drones for “everyday exploration and business applications”Developed the first true "Follow Me" technology

Small Market Players

AUVSI study of 5,500 exemptions from Sept 2014 until Part 107 enactment • More than 5,200 businesses• Over 90% earn <$1M annual

revenue and <10 employees 0

1000

2000

3000

4000

5000

< $1M $1M to $10M $100M to $1B $1B+

Operator Revenue

Ohio UAS ManufacturersTYPE PLATFORM CITYManufacturer Horsefly‐ Octocopter LovelandManufacturer EH4 ‐Quadcopter SpringfieldManufacturer/Supplier/Distributor Commercial/in‐house ElyriaManufacturer Fixed Wing New PhiladelphiaManufacturer Fixed Wing AkronManufacturer Fixed Wing BeavercreekManufacturer Fixed Wing EnglewoodSupplier Electric Motor GreenvilleSupplier Electronic Control Units West ChesterSupplier Radio Frequency Communication Systems Middletown Supplier Propellers PiquaSupplier Circuit Cards and Cable Harnesses DaytonManufacturer/Supplier/Distributor UX5 and ZX5 platforms, GIS Systems, Data Analysis Programs DaytonSupplier Flight Data Systems, Power Solutions MansfieldSupplier Unmanned Aerial Vehicle Composite Structure Fabrication DaytonSupplier Electronic Systems PerrySupplier Speech Control Devices BeachwoodSupplier Radomes, Antennas, Sensors and Arrays DaytonManufacturer Halo Dayton

Landscape

Source: Droneii2018

Unmanned Platform Manufacturer

Services

Components and Systems

Software

Counter Drone

Shows, Conferences, Events

Coalitions, Organizations & Initiatives

User G

roups, Netw

orks

MarketplaceTest Sites

Insurance

Media, News, Blogs & Magazines

UAS Risk Capital Trends

• Size and number of investment deals trending upward since 2012• CB Insights projected 122 total deals worth $506M in 2017

• Majority of funding is for early stage ventures • Seed and Series A accounting for 62% of total funding in H1 2017

Fundraising Stages CapitalPre‐Seed Seed Series A

Revenue $0 >$5K per month >$100K per monthProduct No MVP MVP / Beta

Early releaseAll systems go!

Customer/Revenue Growth Customer Validationor Pilot complete

Beginning 10% per month for 6+ months

Cofounding Team 1‐4 Cofounders 2‐4 Cofounders full time 2‐4 Cofounders full timeExec Team Founders Founders + 1‐5 Founders + 5‐20Board of Advisors 1‐2 industry credible advisors 3‐6 Serial Entrepreneurs 

and/ or industry experts6+ Serial Entrepreneurs, investors and/or industry 

expertsBoard of Directors None  1‐2 cofounders 2 founders and 1 Serial 

Entrepreneur, Investor or Industry Captain

Runway No funding yet but you should have personal cash 

flow

6‐18 months  6‐18 months

Raise Target Amount $50k ‐ $250k $500k ‐ $2m $2m to $10m

Source: CapitalPitch 2016 (Australia)

Most Active Drone Investors 2012-2017Investor Rank  Investments

Nondilutive Funding/Support

State • i-Corps at Ohio• TVSF • Regional ESPs (The Entrepreneurs Center)Federal • SBIR/STTR

GovernmentPB18 by Department

Takeaways• Large and growing market• Crowded space, including international players• Government funded techs areas tend to have a higher success rate • VC funding is trending up with a concentration in earlier stages • Not all firms are venturable• Success stories from companies that have transitioned from 

military to commercial (AeroVironment)• Opportunities for service providers • Opportunities for complementary component parts or service 

providers like GoPro