The company behind the most popular consumer drone in the world announced this morning that it was raising $75 million in funding from Accel Partners, an investor in companies like Facebook and Dropbox. "Accel’s experience backing some of the world’s most iconic technology companies as they built communities around their products will be useful for us as we expand as a platform for innovation," said DJI founder and CEO Frank Wang.
Accel put in money at roughly an $8 billion valuation, and DJI is in further investment talks which value the company around $10 billion, according to a source familiar with the negotiations. DJI is on pace to double its sales this year, generating around $1 billion in revenue.
"DJI is kicking everybody's ass."
"DJI is kicking everybody’s ass," said Bilal Zuberi, a tech investor who has backed drone makers like CyPhy Works. "They are the Apple of the space." DJI isn't just taking the lion's share of the profits. It also resembles Apple in that it offers an attractive and easy-to-use gadget that is difficult to modify when compared to more open and modular systems developed by competitors.
That approach has helped it win over legions of rookie pilots, but made it less of a player in the commercial market for drones, where units need to be customized for specific tasks. "It became apparent early on that there were really two types of drone companies," said Mike Abbott, a partner at Kleiner Perkins who invested in Airware, a drone startup. The first kind takes a horizontal approach, building software or hardware that can work with any drone. "Others are looking into a certain vertical, say precision agriculture."
DJI had been a vertical company making drones for aerial photography and video, but the company hopes to use this funding to change that. "We aspire for DJI to offer a platform for unbounded creativity and exploration across areas as diverse as filmmaking, agriculture, conservation, search and rescue, energy infrastructure, mapping, and more," said Wang.
"You want to be the operating system, not the manufacturer."
The repeated use of the word platform is telling. DJI won't tip its hat completely about future plans, but, reading between the lines, it appears the company would like to not just sell hardware, but to become the backbone that supports new companies and services across the entire drone ecosystem. That has been the mantra pitched by tech investors like Chris Dixon. "The hardware will be commoditized, and the value will accrue to the best software," he told The Verge. "You want to be the operating system, not the manufacturer."
DJI did release a software development kit when it debuted its Inspire One unit in November of last year. Its investors believe that its combination of hardware and software will make it the front runner in the race to fulfill the booming demand for drones. "DJI is quickly establishing itself as the owner of the world’s most powerful robotics platforms," said Sameer Gandhi, the partner at Accel who led this investment. "The democratization of the skyways is well underway with affordable access to UAVs allowing people and companies to rethink what’s possible."
Disclosure: Accel is also an investor in Vox Media, the parent company of The Verge.