Drone Startup CyPhy Works Gets $22 Million Boost From Bessemer Venture Partners
Drone startups are beginning to take flight, at least in the world of venture capital.
On Wednesday, Danvers, Mass.-based CyPhy Works said that it had raised $22 million in a round of funding led by Bessemer Venture Partners. The announcement is the latest in a series of private investments in companies in China and the U.S. building unmanned aerial vehicles (UAVs) for the consumer market.
Led by iRobot IRBT +0.00% cofounder Helen Greiner, CyPhy (pronounced Sci-Fi) did not disclose its valuation following the round, which brought its total funding to more than $30 million. Previously the company had raised $7 million from Lux Capital in Nov. 2013 and concluded a Kickstarter crowdfunding campaign in June for its six-rotor LVL 1 drone, raising nearly $900,000.
The company is “looking forward to working closely with our new strategic investors to accelerate adoption of drones into public safety, construction, agriculture, journalism, mining, defense, and other fields,” said Greiner in a statement, citing not just Bessemer but also UPS Strategic Enterprise Fund, a private investment arm of the shipping company, and Motorola Solutions Venture Capital.
While the likes of Amazon have stoked the public’s imagination of flying robots delivering packages, CyPhy Work’s investment partnership with UPS doesn’t necessarily mean the company will be jumping head on into drone delivery. However, as its previously announced relationship with Motorola shows, CyPhy is using deals with corporate players to gain exposure for its relatively new and experimental technology.
“We have a strategic relationship with Motorola’s public safety division [which covers] most of the nation’s public security,” said Greiner at the TechCrunch Disrupt Conference in San Francisco last month.” We want to leverage that to get drones into police, fire fighters and others, across the world and not just the U.S.”
The startup’s Series B round comes after other companies building drone hardware have raised millions. In May, DJI, the world’s largest consumer drone manufacturer, took in $75 million from Accel Partners at an $8 billion valuation. That was followed by fellow Chinese companies and competitors EHANG and Yuneec, raising $42 million and $60 million respectively, in August.
CyPhy Works biggest differentiator from its Chinese counterparts is that it has built tethered drones, connecting flying robots to users with a fishing line-type filament, which the company said allows for unlimited flight times, improved control and better video processing. Its Persistent Aerial Reconnaissance and Communications (PARC) vehicle system, which was initially built for military-use cases, utilizes this tethering technology, and Greiner said that the funding will go a toward the commercial launch of that model. (The company’s Kickstarter drone, LVL 1, does not feature tethering.)
“CyPhy Works has produced the first truly differentiated drone and as we see more industries leverage this technology, we expect they will capture significant market share,” said Bessemer Venture Partners’ Felda Hardymon, who joins the company’s board with the investment.
Skeptics of the drone space argue that the products will eventually be commoditized much like other consumer electronics with so many companies trying to build hardware. Greiner agrees to some extent, but noted that the best companies will be able to separate themselves by addressing specific “end user needs.”
“Similar to cell phones and computers, it will be about making systems easy to use, portable, and rugged like our LVL 1 drone,” she wrote in an email to FORBES. ”No one has yet made the ‘iPod of drones.’”
Other participants in the $22 million round include Draper Nexus Ventures and existing investors Lux Capital and General Catalyst Partners.