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US drone firm Skydio valued at $1 billion as government freezes out Chinese competition

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Government grounding of DJI drones creates new opportunities for US firms

Skydio’s X2 drone is aimed at enterprise and military customers.
Image: Skydio

Skydio has become the first US dronemaker with a valuation of more than $1 billion, a signal of deeper investment in American-made drones after the US government blacklisted Chinese manufacturers. The California-based Skydio raised $170 million in a Series D funding round led by VC firm Andreessen Horowitz, as first reported by The Financial Times.

Skydio’s drones are best known for their self-flying tech, which allows the aircraft to autonomously navigate obstacles and track users on the ground. The company released its first drone in 2018, the $2500 R1, aiming the product at consumers. It followed this up with the smarter and much cheaper $999 Skydio 2 in 2019, and last year announced its first drone aimed specifically at enterprise and military customers: the X2.

Putting new emphasis on enterprise products makes sense given that the sector is the fastest-growing in the drone market. Data gathered by Valuates Reports, and reported by the FT, says the global market for commercial drones will grow from $6.5 billion in 2020 to $35 billion in 2026. As well as opportunities in areas like construction and surveying, where self-flying drones can be used to map terrain and buildings with minimal pilot training, the US government is also set to be a big future customer for firms like Skydio.

Skydio’s self-flying tech makes its drones easy to use for surveying jobs in markets like construction.

After the US Armed Forces, Pentagon, and Department of the Interior grounded drones with Chinese components over espionage fears, there have been new opportunities for American competitors. Although Chinese drone giant DJI still dominates consumer sales, with an estimated 70 percent market share, it can no longer sell to US government clients. DJI’s clout in the sector, though, has already contributed to the demise of US firms like GoPro and 3D Robotics, which abandoned consumer sales over the last few years.

Skydio’s X2 drone, which comes with integrated thermal camera and enterprise-grade controller, looks set to fill this new gap in the market. The X2 is already likely to be an official US Army drone after making it to the final round of procurement in the army’s Short Range Reconnaissance Program, and Wired reports that Skydio also has contracts with the Air Force and DEA. The firm is also working with at least one police department in California.

Skydio’s drones will be used for emergency response, surveillance, and reconnaissance missions, and the company says it has no plans to weaponize its tech. It’s also working on new consumer drones, too. “We have more products coming in that market that we’re excited about,” Skydio CEO Adam Bry told The Verge last year, though it’s not clear when these will be launched.