Posted 01/07/22

Investing in Unmanned Aviation. What you need to know before you invest.

The Unmanned Aviation industry is packed with potential for innovators, entrepreneurs and investors.

There’s a global opportunity to expand the potential of Drones (or Unmanned Aircraft Systems – UAS), Advanced Air Mobility (AAM) and Unmanned Traffic Management (UTM). This is being fueled by government backed funding initiatives, a surge in unmanned technology start-ups as well as an eagerness by investors to add these innovative capabilities and operations to their portfolios.

The technology is on the cusp of delivering breakthrough capabilities and so it’s a fantastic time to get onboard.

It’s easy to see the potential with the promise of high returns and the prospect of being part of a highly innovative technology that will bring a global change of huge proportions: environmentally, economically, technologically and socially. But like every investment, it’s only when you start digging under the surface that you really get to understand the feasibility, risks, potential ROI and timescales.

In addition to the multitude of questions and probing you’ll want to do on any investment, there are 4 key areas that a savvy investor will also want to look at when assessing an opportunity in this emerging industry.

In this blog, we give you a no frills, down to earth, guide on what you should be looking at before you invest and how to make sure your investment stays the course.

1. Engineering feasibility

When it comes to unmanned aviation, the capabilities that are being built are staggering, particularly when it comes to Advanced Air Mobility, UAS logistics and High Altitude Pseudo Satellites. It can be hard to imagine these aircraft becoming part of our daily lives, but they will be commonplace sooner or later.

Opportunities may seem more sci-fi than realistic, and of course the most fundamental question is:

  • Is the design realistic? What confidence do you have in the design concept and are you confident that the engineering team have the right experience and skills to build it? Secondly:
  • Does the build plan include a Proof of Concept prototype? This is a vital component to most large scale UAS and AAM projects. Not only does it prove (or disprove) that the concept actually works physically, but it also brings a huge amount of learning to the table.

2. Understanding the Use Cases

A lot of unmanned projects are engineering led. This is often typical in such a technology driven industry, but there is a balancing act between pushing the boundaries of innovation and making sure that there is enough customer demand to support a robust business case.

It takes confidence to launch something that hasn’t been done before and where demand can’t be proven. That’s the business of innovation and it can pay off. When the iPad launched in 2010 it was described by Wired as ‘little more than a giant iPhone’ but has been a phenomenal success.

They key questions to ask are:

  • What are the Use Cases? 
  • How and when can they be tested?

The when is important here. Knowing when the use case assumptions will be validated is a big milestone for an organisation and their investors. Google/Alphabet’s famous HAPS (High Altitude Pseudo Satellite) venture ‘Loon’ discontinued citing challenges building a sustainable business model, taking the project as far as they could to validate their assumptions before concluding that it wasn’t a viable launch candidate.

  • Does the design deliver all the Use Cases?

3. Regulations Regulations

Regulations Absolutely essential, every UAS operation needs regulatory approval. But experience has shown us that regulation often gets overlooked until too late in the project, because UAS companies tend to focus on what can be done from an engineering perspective, not what can be achieved from a regulatory and safety one.

While an organisation wants to invest as little as possible in proving the concept, they need to be planning for the long haul, and that means thinking about the regulatory landscape that they’ll ultimately be operating in.

Build for the short-term. Plan for the long-term.

Examples of this are:

  1. Being aware of the safety features that the aircraft will need to have in order to be approved for flight testing or the ultimate use case you have in mind eg. Having system redundancies or features like a parachute system. This might not be included in the prototype but an engineer will need to factor that in during the design phase.
  2. Operating over densely populated areas is currently prohibited in most countries without a very stringent airworthiness certification process and its many associated requirements and lengthy lead times. This is unlikely to change, so a use case like a delivery service over central London, while not impossible, is going to take some serious time and resource to achieve.

So regulatory approval should be more than a line in a plan and on a business case, even during the early phases.

Ask yourself:

  • Does this organisation know the regulatory landscape they will be operating in for the use case they are proposing?
  • Have they factored in regulatory requirements and approvals into their long-term plan including costs and timescales?

4. Industry lessons

The unmanned industry has enough experience now to be learning from its mistakes. Pushing the boundaries of innovation will always come with challenges, learnings and reflections. Looking at similar operations that have failed, and those that are succeeding, is a helpful way to gain insight into the industry and how the opportunity might perform.

And once you’ve invested

There are three big themes that you should keep in mind after you’ve invested in UAS technology.

  • The changing regulatory landscape: The industry is changing at lightning pace. Regulations are evolving as the industry grows and learns from its successes and mistakes. Understanding the changes and preparing for them will save a huge amount of time and money in the long run.  Ask yourself:
    • Who is keeping up to date with regulatory changes and do they have a plan to address any that impact them?
  • Technology advancements. Technology is advancing and innovators are joining forces to work towards industry standards and solutions to address common themes like electronic conspicuity and Unmanned Traffic Management (UTM). Keeping abreast of these developments, or even better, being part of a task force to address them will ensure that the operation is utilising these solutions as early as possible.
    • Who is keeping up to date with industry technology advancements and looking for opportunities to collaborate?
  • Test and trial strategy. Having a thorough test and trial management strategy is vital in proving that the technology works, is safe and meets all the proposed use cases. Fundamental questions are:
    • Who is responsible for the test and trial strategy?
    • Are there clearly defined outputs from the test and trial phases. Ie. What does success look like?

 

If you’re looking to invest in this potential-packed sector, we’re here to help. Contact us for more information or visit our Investors page

LET’S WORK TOGETHER

Call 0333 772 0859 to speak to our team of experts, or send a message using our enquiry form

Holding a mobile phone