May 28, 2015

By Lynda Kiernan

Drone companies are not only developing and building unmanned aerial vehicles (UAVs), they are now investing in them as well, indicated by the launch of two separate early-stage investment funds aimed at drone startups.

This week, Shenzhen-based DJI, the world’s largest drone manufacturer, in partnership with Silicon Valley-based venture capital firm, Accel Partners, which invested $75 million in DJI earlier in May, launched SkyFund – a $10 million investment fund focused on early-stage innovators in the UAV industry. SkyFund, which is designed to expand the relationship between DJI and Accel, and owned 50/50 by both partners, has already begun talks with companies they feel will be able to grow the market, and is examining global opportunities, but it is not willing to announce any investments at this time.

Although starting out on a small scale, with an initial corpus of $10 million and individual investments starting at $250,000, SkyFund will likely scale up rather quickly, according to Accel’s Sameer Gandhi, who says the fund is “… a way for companies to forge a strong technical and marketing relationship with DJI, but the charter of the fund is larger than that. It’s really about accelerating this UAV ecosystem.”

Although SkyFund investees will not be required to use DJI products, startups will be offered technical resources and branding support to help companies accelerate their path to commercialization, while also guaranteeing the protection of a startup’s intellectual property.

Meanwhile, California-based drone start-up, Airware, which makes operating systems for commercial drones, has announced the launch of a rival vehicle, the Commercial Drone Fund. Airware has declined to release information regarding the total funds available in its fund, or the limited partners providing such capital, but it has stated that it will be investing up to $1 million in ‘dozens’ of early-stage startups involved in the development of sensors, software, data analytics, services, and UAV-specific systems within the next two years. It first two investments have been in Paris-based, data analytics firm, Redbird, and London-based Sky-Futures, which is developing drones for use by the oil and gas industries.

These vertically-focused investment vehicles could be a means for players to solidify their leading roles in a nascent industry that needs capital investments to gain real growth. This was the case in the 2008 launch of the $100 million iFund, created by venture capital firm Kleiner Perkins Caufield and Byers to spark iPhone app growth, and its 2013 partnership with venture capital fund Andreessen Horowitz and Google Ventures, to fund startups working on innovations surrounding the Google Glass product.

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