The Best State in the US for Starting a Drone Business

The best place in the US for starting a drone business isn’t necessarily California’s Silicon Valley, where entrepreneurs flock.  Drone entrepreneurs who want to stand out in their field (pun intended) just might find more space – and more money – in North Dakota.

The place, the opportunities and the people combine to make the state a great choice for the drone industry.  North Dakota has a rich tradition in aerospace, which has led to some big advantages in infrastructure.  The Grand Forks Air Force Base is a significant presence, and the state has made the most of their partnership.  The Grand Sky Technology Park, with Northrup Grumman and General Atomics as anchor tenants, is located on Grand Forks Air Force Base.  The Northern Plains UAS Test Site – one of 6 FAA test sites chosen by the FAA in 2013 – is right there too, with close ties to the Grand Sky site and the opportunity to test new technology in open terrain and a variety of climate conditions. The test site – and the state – have made some unique provisions for testing flight capabilities beyond visual line of sight (BVLOS), among other conditions.  The University of North Dakota has a large and varied aerospace program, and is a leading institution in UAV research.  But it isn’t just the presence of the test site or research institution that is important – it’s the access that counts. North Dakota prides itself on making it easy for new businesses to negotiate the system and form the relationships they need to get their products to market.

Brian Opp, ND Department of Commerce Manager of Aerospace Business Development, says that the support for the industry comes from the top down.  “North Dakota has been focused on supporting this industry from about 2005,” says Opp.  “We understand that the industry has tremendous potential…leadership is really only a call away.”  That potential has multiple layers: the state not only supports the drone industry, but also some of the industry’s biggest commercial customers, agriculture and energy.

Often cited as one of the fastest growing sectors for commercial drone applications, energy companies represent a large market for drone companies; North Dakota is the #2 oil producing state, with over 13,000 producing wells  – and with that foundation, the state has expanded their strategy to embrace a wide variety of new energy sectors.  Agriculture, which offers one the highest value ROIs for drone technology, is a top industry in North Dakota: over 90% of the total land area is used for agriculture, with over 30,000 family farms and ranches. 

The research facilities and ready made customer base are appealing.  The factor that makes North Dakota stand out above the rest, however, is the sheer volume and variety of support programs that they offer.  Combined with relationship-based support services, the array of programs that the state has developed to support new businesses is impressive.  “There are many resources available to put financing together,” says Opp.  The Bank of North Dakota – a state run bank – offers the New Venture Capital Fund, acting like a VC fund without taking control of the business or trying to maximize return.  “These programs help make new companies more ‘bankable'”, explains Opp.  “Their involvement reduces the risk to a traditional lender.”  The North Dakota Development Fund can provide gap funding.  The list goes on: Innovate ND is an entrepreneurial services program providing access to resources, training, and mentors.  Research ND encourages partnerships between businesses and research organizations; and provides grants, funding opportunities, and connections to make them happen.

Binding together the facilities, the opportunities and the programs are the people.  While small businesses in New York or California may have to compete fiercely for visibility or resources, Brian Opp says that the drone cluster in North Dakota is always looking for ways to collaborate.  “Last week we hosted an entrepreneur from another state and introduced him to some of the research resources and other business owners,” he said. “We all sat around and had dinner, they talked all night long – this is a glimpse of what it’s like to start a business in North Dakota.”