- Companies creating electric aircraft for short-distance flights have secured hundreds of millions of dollars, but it will be years before any deliver on their goals.
- While you may have to wait to take your commute airborne, investors looking for payoffs in the shorter term have another way into this industry.
- Just as important as investing in the companies making aircraft is investing in those developing the myriad technologies that will enable the likes of Joby and Lilium to take off.
- We asked venture capitalists and industry experts to name the companies best-poised to succeed by enabling the flying-car future.
- Visit Business Insider’s homepage for more stories.
Few investment realms are as riddled with unknowns as aerial mobility, the young field hoping to turn commuters into aeronauts with air taxis, or flying cars.
It’s a new form of aviation that uses novel propulsion strategies, and it requires world-class engineering, is up against stringent passenger-safety requirements, and is directed at a market that investors can only hope will emerge as analysts predict.
Of course, investors are well aware that such things take time, and many have proved themselves game for going long. Lilium Jet, Joby Aviation, Kitty Hawk, Archer Aviation, and more have secured support in the hundreds of millions of dollars each to develop their aircraft.
Michael Pye, an investment manager with the Edinburgh, Scotland-based Baillie Gifford, says part of the appeal of his company’s recent investments in both Lilium and Joby is the broad influence they herald.
“We are drawn to business models that benefit society by removing friction from some aspect of people’s lives,” he said in an interview with Business Insider. “Affordable, on-demand flight at 186 mph promises the ultimate removal of friction, short of going to space.”
But while you may have to wait to take your commute airborne, investors looking for payoffs in the shorter term have another way into this industry.
Cyrus Sigari, the cofounder of the aeromobility-focused venture-capital firm UP.Partners, said that just as important as investing in the companies making aircraft is investing in those developing the myriad technologies that will enable the likes of Joby and Lilium to take off. These include advanced additive-manufacturing technologies, autonomous control systems, computer vision and machine learning, battery- and hydrogen-based propulsion systems, and sensing and communications.
“There’s a rather large world of things for people to invest in that isn’t a flying car or eVTOL company but which still offers exposure to the future of moving people and goods in all three dimensions,” Sigari said.
Sam Korus, an analyst at ARK Investment Management, told Business Insider that drone developers provided not only an entry point to urban air mobility but also exposure to technologies being deployed across many sectors.
“They innovate in battery technology, 3D printing of lightweight components, artificial intelligence, and computer vision,” he said. “Those all have huge implications across not just drones but autonomous driving and other mobility sectors.”
Regardless of whether they’re looking at companies seeking to deliver aircraft or the companies that are enabling their development, investors have a variety of metrics to gauge the viability of mobility-centered initiatives. Baillie Gifford’s Pye, for instance, is keen on founder-led teams with “the creativity and resources” to pursue their vision and leadership that possesses a clear hypothesis about how the early advantages might assert themselves over time.
Korus looks for cost declines in key technologies that are applicable across the sector and a firm understanding of unit economics for the technology.
“If the company is operating out there, and the economics just don’t make sense, that’s something we’d want to avoid,” he said.
Sigari said some of the key qualities he looked for in prospective investments included a high awareness of competition in the segment; efforts that aren’t initially predicated on regulatory approvals, such as cargo deliveries; companies with patented technologies; and those with multiple revenue streams that aren’t dependent “on our collective utopian hope for ‘Jetsons’-style aerial mobility.”
Such efforts not only pave the way for future aeromobility efforts but also promise robust survivability prospects for the companies themselves. Of course, this benefit also extends to the investors who are looking to get in on the ground floor of something that can go nowhere but up.
If that sense of contributing to the building blocks of a new mode of transportation is appealing, consider the six companies below that are enabling that growth.
ARK invests in the additive-manufacturing specialist Stratasys, Korus said, because it’s making inroads in the aerospace sector. ARK founder Catherine Wood has noted the breadth of its applications, from motorsports to consumer products and medical supplies. This will be key to the rapid-prototyping needs of startup aircraft manufacturers, as well as the eventual production of the final products.
UP was an early investor in Skydio, a drone manufacturer that focuses on autonomous flight and computer-vision technologies that allow it to navigate dense environments safely, which will be essential to computer-piloted, passenger-carrying air taxis.
“They’ve done a great job of scaling a consumer product from being a toy to being deployed in very important and useful industrial and government applications,” Sigari said.
The San Francisco-based Ware uses the Skydio platform for autonomous inventory management inside warehouses. This is important, Sigari said, because the indoor environment allows the applications to advance faster, since the Federal Aviation Administration doesn’t regulate indoor airspace. This regulatory risk can slow down or even kill startup efforts before they develop enough traction with their technology to manage the additional requirements and expand to broader applications for urban air mobility.
Korus said the familiar satellite communications company Iridium was entering the realm of urban air mobility thanks to its ability to track drones during beyond-line-of-sight operation — a critical capability for integrating drones and autonomous passenger-carrying vehicles into public airspace.
“That’s kind of a big deal, and the economics for all these applications come to fruition once you can start doing that and allowing the autonomous aircraft to operate safely in the sky,” he said.
UP also went in early on Zipline, which uses long-range fixed-wing drones to shuttle medical goods to remote areas in Africa. The aircraft fly up to 50 miles, drop the payload via a small parachute, and return to their launch points. Sigari says the company is delivering 50% of blood supplies in Rwanda and Ghana, and the company just announced a partnership with Walmart to initiate drone deliveries of health and wellness supplies in the US.
ARK’s investment in Flir, a maker of thermal-imaging, night-vision, and other sensors and data-analysis systems, provides yet another foot in the door of the future of air mobility, as the company has strong industrial and defense contracts that are helping speed along the technologies that will also be necessary for consumer applications, Korus said.