DRONEII: Drone Industry Investment and Growth, from the Floor of Energy Drones and Robotics Summit

As the Energy Drone and Robotics Summit 2023 began its second day in Houston,  Hendrik Bödeker of Drone Industry Insights (DRONEII) took the keynote stage to present Money & Markets: What’s Hot Today & Tomorrow for Robotics/Drones – Analysts Perspective.  

Europe-based DRONEII is the leading global drone industry research and consulting firm, providing deep research into market size, use cases, ecosystem players, and more.  In his keynote this morning,  Co-Founder and CFO Hendrik Bödecker discussed the market size and investment environment in the drone industry today – and what DRONEII’s research indicates is coming next.

Drone Market Growth

“We’re still at the beginning of the drone industry,” says Bödecker.  “But the adoption rate is growing, and over the last several years we’ve seen a tremendous change.”  DRONEII’s research shows significant growth in the drone industry overall.  While drone hardware makes up a little over 22% of the industry value, the vast majority of the value in the industry is in services.  “You have to use that hardware,” Bödecker comments.  “And you have to train people.”

Currently, Bödecker says that Asia holds the majority of the market value –  and that’s likely to continue.  Asia’s regional growth is reflected in drone industry investment trends.

Drone Industry Investment

Starting in 2015, investment in the drone industry began to grow in earnest with investment in 3DRobotics, manufacturers of the now defunct Solo; a $60 million investment to DJI; and another $60 million to Yuneec.  Since 2015, investment has grown: staying relatively steady until 2020 and then exploding in 2021.  Investment fell significantly in 2022, but Bödecker says that the environment appears to be improving in 2023.

Unsurprisingly, the majority of venture capital investment was in North America.  “That’s partly due to the spirit of North America,” says Bödecker.  “But investment is now moving towards Asia.  There are a lot of great startups there, and they are drawing investment.”

Shifting Hardware Market Share

In commercial-off-the-shelf (COTS) drones, DJI is still absolutely dominant, with a market share of more than 70%.  While the company lost a bit over 3% in market share, the overall growth of the drone industry roughly compensated for the loss in share size.  Autel, with the EVO family of drones in addition to the new Dragonfish fixed wing; and Parrot, with a new focus on government contracts and the ANAFI drones, has also grown in market share.

If COTS hardware hasn’t seen huge changes, explosive growth is seen in what Bödecker calls the “niche brands” – companies producing more use-case specific commercial offerings.  U.S. companies Watts Innovation, creating heavy lift industrial drones used for retail drone delivery and industrial use cases topped the list, with growth of more than 270%.  SWAT operations and law enforcement drone manufacturer BRINC also showed growth of more than 200%.  These brands were followed in the #3 spot by European fixed wing aircraft Wingtra, specializing in high accuracy survey use cases.

Drone Stocks

At this stage in the industry, there are relatively few publicly traded drone companies: dominated by military drone providers Aerovironment.  Charts of drone stock performance are generally positive, but show up and down movement.  That shouldn’t be discouraging, Bödecker says.

“I’m not a big fan of following drone stocks,” says Bödecker, pointing out that the stock performance doesn’t necessarily reflect company performance.  While the stock market has gone up and down, Bödecker comments that the drone companies themselves are growing, with gains in business and revenue.

Up or Down?

In general, sentiment about the drone industry is positive moving forward. In 2022, drone companies expectations and actual realized revenue converged.  “That’s a very good sign for the drone industry,” says Bödecker.  “And as a result, companies are very optimistic for growth in 2023.”