Drone explosion: Cargo UP, air taxi DOWN

Have you taken a flying Uber yet? (I had a chance to in Vegas but never acted on it … foolishly.)

We’re in the middle of a flight revolution, powered by drones.

In the past two years, there’s been $5 billion of investment in personal drones, multicopters, autonomous helicopters, and vectored thrust aircraft. 129 different companies are developing almost 170 different air taxi, cargo, vertical takeoff or landing craft. Many of these, 65%, are doing electrical power and 25% are going with hybrid power models.

Support TechFirst: Become a $SMRT stakeholder

So what’s happening here? Why has investment almost 10X’d in a little over a decade? And why are cargo drones so hot, while air taxis are so cold?

In this episode of TechFirst with John Koetsier, we’re chatting with Daniel Shaposhnikov, partner at Phystech Ventures. Check out my story at Forbes, or keep scrolling to watch our conversation and get a full transcript …

(Subscribe to my YouTube channel)

Get TechFirst: drone explosion


Transcript: $5B investment in drones, multicopters, autonomous helicopters in the past 2 years

(This transcript has been lightly edited for length and clarity.)

John Koetsier: Have you taken a flying Uber yet? We’re in the middle of a flight revolution. In the past two years, there’s been $5 billion of investment in personal drones, multicopters, autonomous helicopters, and vectored thrust aircraft.

129 different companies are developing almost 170 different air taxi, cargo, vertical takeoff or landing craft. Many of these, 65%, are doing electrical power and 25% are going with hybrid power models. So what’s happening here? Why has investment almost 10X’d in a little over a decade?

We’re chatting with Daniel Shaposhnikov, partner at Phystech Ventures. Welcome, Daniel! 

Daniel Shaposhnikov: John, thank you for the invitation. 

John Koetsier: So let’s start here, Daniel. What’s going on here? Why this big burst of innovation? 

Daniel Shaposhnikov: Globally, we see that the investment appetite is going towards deep tech companies. It’s not only the drones. So we will also see high growth of the level of interest for quantum technologies, for example, or deep artificial intelligence, etc. etc. And drones, they solve, let’s say, logistic or urban problems.

John Koetsier: Okay.

Daniel Shaposhnikov, Partner at Phystech Ventures

Daniel Shaposhnikov: And all the problems like traffic jams, it’s a headache for every city manager or every city — a city man who is spending a huge amount of time during the day moving in a traffic jam. That’s why society is dreaming about how to fly over, how to use the sky in this urban problem.

John Koetsier: So, what are the possibilities here? What are these craft designed to do? I mean, some obviously air taxis, but not all, correct?

Daniel Shaposhnikov: Yeah. So, from my perspective, air taxi topic is a little bit hyped, you know, because on this kind of innovation, companies are trying to raise a large sum of money. And if you will see the website of even each company — not maybe not all, but most of the companies who are doing air techs — you will see on the backstage a cargo drone.

And why? The answer is very simple, because their scalability for the cargo drones will be much closer, I mean, in a timeframe, than air taxi. Significantly less amount of problems we have to start cargo logistics via the drones.

So, I mean, regulations, even the technology, even the electrification of these kind of drones, because not all of them will need 100% pure electrical engine. When you fly over the mountain or over the sea, you can use some kind of a hybrid scheme and it will be also very much more ecological than pure drone combustion engine, but still it will allow the aircraft to have a significant time of flight and distance.

John Koetsier: Yes. Yeah. I mean, let’s talk about that power plant right now, because of the ones that you’ve studied, 72% are being developed for urban areas. You know, what’s our city going to look like in 10 years? Are we going to have dozens, hundreds of these little flying cargo drones, as well as flying taxis all over our cities?

Daniel Shaposhnikov: Yeah. So, basically, what we will definitely see changed … air traffic management in the city. That’s for sure, because currently what we can see in the sky is only helicopters sometime. In most cases, it’s some kind of a governmental helicopter or emerging … and that’s it, and it’s very noisy.

John Koetsier: Yes.

Daniel Shaposhnikov: And I’m sure that you know this, you feel this, you hear this, and that’s why it’s one of the problems why helicopters are still not doing internal city logistics in the scale. That’s one of the problems.

And when we, for example, are dreaming about hundreds of air taxis all flying in the city, the first thing we need is a reliable air traffic management, because you know that nobody wants the air taxi to land or fall on somebody [inaudible].

John Koetsier: Yeah. I mean, what you’re saying is people don’t want them landing on their property and also you don’t want accidents up in the air. You need to have some way of managing all that traffic, making sure it goes safely in the right places, not in the wrong places.

And also you need something that is not crazy noisy, which speaks to the electrification that we were talking about, the EV era of flying vehicles. A huge percentage of the ones that you’ve studied are actually electrically powered, but it’s not just from battery, correct? 

Daniel Shaposhnikov: Correct.

So the first thing that we need to take into consideration is the distributed electrical propulsion. So this gives most of the air taxis their reliability. And this allows air taxis to use different energy systems, including storage. You can use batteries, sometimes in some electrical schemes, capacitors … sometimes even fuel cells, I mean, hydrogen fuel cells.

You know that of course the hydrogen fuel cells for the aircraft and technology overall is currently on rather low stage of technology readiness, but it’s continuously improving and the companies’ startups are moving fast. So, I think, and I see in the report that already more than 10% of the companies that are trying to take off electrical air taxi are making a bet on a fuel cell.

John Koetsier: Mm-hmm.

Daniel Shaposhnikov: And it’s impressive.

John Koetsier: So you found 129 companies. They’re building almost 170 different types of craft. Where are these companies globally? Where’s this innovation happening? 

Daniel Shaposhnikov: You know, the interesting thing that a huge maybe — no, near half of such companies were founded and are operating in Europe. And also about, I guess, 40 plus percent are in the States. And the rest … very, very small amount of companies are in Asia and in other sectors of the world.

So that’s why we can see that two majors: Europe and the States.

Of course, as in most of the technologies, China, they are doing also not bad, but the amount of companies that we can count is rather low. But, an interesting thing that according to our vote — so EHang, it’s a rather famous Chinese company…

John Koetsier: Yep. 

Daniel Shaposhnikov: …is doing well. So, and we can even say that currently EHang is also, I mean, the stage of the development of EHang technology, maybe it’s the most solid. 

John Koetsier: Yeah, I saw their technology. I saw their drone, their people mover — I think it was two, maybe three years ago at CES, actually — quite impressive.

I think that’s a bit of a Chinese model that’s kind of the state wants a few big companies to do really, really well and ensures that they do well, versus the European model, the American model, hey, it’s venture capital, we’ll throw it out in 25 different places, 35 different places, see who sinks and see who swims.

What are some of the key brands that we should know? You mentioned EHang from China. What are some of the other brands that we should know? 

Daniel Shaposhnikov: Mmm, the most interesting … are unicorns, of course. Because all investors are monitoring how many companies in each vertical became unicorns. What is the timeframe of becoming the unicorns and what money we need to spend to get these unicorns on the table.

And we can say here that about seven years needs a company, and about an average about half of a billion dollars to become a unicorn in the vertical of vertical takeoff and landing aircrafts. And you know that unicorns are rather famous and we can mention, for example, two companies we can mention, I think Joby Aviation. Yes, they are doing rather well. And also we can mention Archer, of course.

John Koetsier: Mm-hmm.

Daniel Shaposhnikov: And some others, of course Lilium. Interesting thing that among the unicorns only, Beta and Volocopter are trying to sell. So we cannot say that they already shipped something.

John Koetsier: Yes, yes. 

Daniel Shaposhnikov: But it seems according to the public information, of course, it seems that they signed binding contracts. It’s really impressive. So I like companies that are starting to sell. 

John Koetsier: Yeah, [inaudible crosstalk] if I recall from the report, I think it was about 19 different companies that were starting to sell right now out of the 130? 

Daniel Shaposhnikov: About 13, or…

John Koetsier: Thirteen. Okay.

Daniel Shaposhnikov: Yeah, 13 companies, and most of them are shipping cargo drones. 

John Koetsier: Okay. Okay, as you said, there’s less regulation there.

Daniel Shaposhnikov: Yeah, yeah, yeah, yeah. Currently, only three companies are trying to sell air passenger aircraft. And only EHang, as I understand from the public information, is really selling. So EHang published that last year [in 2020], it sold 22 machines. 

John Koetsier: Okay.

Daniel Shaposhnikov: So, and of course these machines are sold for kind of pilots. But still, it’s impressive. 

John Koetsier: Absolutely. Okay, maybe let’s end here … look into your crystal ball, look at the future a little bit and say, you know, when will air taxis and drone delivery be normal? Do you think that’s five years, 10 years, 20 years? What do you think it is? 

Daniel Shaposhnikov: You know, it seems that during the next five years we will see a scale of cargo drone delivery.

And in different payloads, I mean, that it will be small aircrafts like Zipline or Matternet that are doing, for example. Or heavy payloads drones, like, AutoFlight, like Aura, Aeroscout, Skeldar is doing so, and air taxi, from my perspective, is different — it’s a little bit more complicated story.

Because if you will look at a Volocopter roadmap that they published recently, it includes lots of details, infrastructural details, regulational details, safety and it’s complicated stuff. I think that first of all, they will need reliable and certified air taxi machine, and I think it’s a huge problem. And the second problem is in infrastructure, air traffic management, and etc. etc. And this will also take time. But I’m sure that we will see this kind of business inside cities, but of course, first routes of air taxi will definitely appear out of the cities … because it’s much easier.

John Koetsier: Absolutely. Safer, less busy environment, fewer regulations, more places to land if you need to, all that stuff, and also having a base of operations where you can recharge or refuel or whatever you might need. Daniel, thank you so much for taking this time. Do appreciate it. 

Daniel Shaposhnikov: John, thank you. It’s my pleasure. Thank you for the invitation and have a nice day.

TechFirst is about smart matter … drones, AI, robots, and other cutting-edge tech

Made it all the way down here? Wow!

The TechFirst with John Koetsier podcast is about tech that is changing the world, including wearable tech, and innovators who are shaping the future. Guests include former Apple CEO John Scully. The head of Facebook gaming. Amazon’s head of robotics. GitHub’s CTO. Twitter’s chief information security officer, and much more. Scientists inventing smart contact lenses. Startup entrepreneurs. Google executives. Former Microsoft CTO Nathan Myhrvold. And much, much more.

Consider supporting TechFirst by becoming a $SMRT stakeholder, and subscribe on your podcast platform of choice: