Zipline: What goes up, keeps raising

Deep Dive

Share prices, test flights, valuations, whatever goes up must come down right?

For startups, in almost every case the rule sticks, but drone delivery unicorn, Zipline is the exception. The San Francisco-based startup just closed its Series F funding round at $330m, which values the company at around $4.2bn, nearly double its last valuation of $2.7bn in a little under two years. In an April 10th filing, the company revealed the Series F funding left Zipline priced at $40.20 per share. The filing also included a Series F-1 extension of up to $20m that could still be added to the round.

In a statement a Zipline spokesperson told Revolution.Aero: We recently closed our Series F funding round at an increased valuation, which involved several new and existing investors. We are well capitalised to continue to grow our operations, including launching our new home delivery service. We look forward to continuing to build the worlds first logistics system that serves all humans equally and brings faster and more environmentally friendly delivery to anyone, anywhere.” New investors have not been disclosed at the time of publication.

The investment comes on the back of Zipline’s announcement of the Platform 2, aka P2 Zip (pictured below), a new autonomous drone with an eight-pound payload and a range of 10 miles. The new platform is expected to deliver up to seven times as fast as traditional delivery, completing 10-mile deliveries in around 10 minutes. Alternatively, P2 can also fly up to 24 miles one way from dock to dock, charging at each dock as it goes. Being able to move from dock to dock, Zipline says it can respond to peak order times, ensuring delivery capacity is maintained.

Founded in 2013, the firm launched its services in Rwanda in 2016 before expanding to Ghana. Zipline now operates internationally in Cote d’Ivoire, Kenya, Nigeria and Japan, whilst also running domestic services in Arkansas, North Carolina and Utah. Completing a delivery every 90 seconds on average, Zipline has made almost 600,000 deliveries and flown 40m autonomous miles. Completing more deliveries in 2022 than in all previous years combined, the firm is planning to complete about 1m deliveries by the end of 2023.

These are big goals but, for what is now the world’s largest autonomous drone delivery operator by several orders of magnitude, realistic targets too. As long as certification is granted at its expected pace.

Originally focused on cornering the medical supplies market, Zipline was able to gain traction through both its operations in less densely populated rural regions of Africa and Covid-19. Activity surged in the initial months of the pandemic as Zipline delivered blood and vaccines to remote locations across the continent. Also, domestic activity was then boosted in 2020 after the firm received a waiver from the FAA to use its drones to deliver Covid-19 relief supplies. Partnerships have now been signed in the US with Walmart, Michigan Medicine, Intermountain Health, MultiCare Health System and, in a move into the retail market, Sweetgreen. Whilst on the African subcontinent, agreements include the Government of Rwanda and Africa’s largest online marketplace, Jumia.

But further expansion of US operations is hinged upon the FAA and how quickly it can certify. The model that works in Africa probably won’t work in the US and other developed countries. Cost per delivery would be very difficult to maintain outside of the NGO/charity structure. Infrastructure wise, the technology works effectively at scale in Africa but not in the US or Europe for example. If it did, then Zipline would not have announced the P2 Zip. Then if the P2 is going to provide a viable-use case high tempo operations will be needed to drive down costs, as will airspace management because these aircraft will operate BLVOS and, finally, regulatory approval.

On the last two points the FAA is progressing steadily. A spokesperson told us: “Safely integrating drones into the National Airspace System is a key priority for the FAA.” The administration has involvement in at least eight initiatives and rules that support safe integration including: UAS remote identification, the BEYOND Program and Low Altitude Authorization and Notification Capability (LAANC). As of May 2023, there are more than 880,000 registered drones in the US; of those, about 350,000 drones are registered for commercial purposes.

Speaking last year, Zipline’s co-founder and CEO, Keller Rinaudo Cliffton said: “We also operate now, scaling quickly, in the US and Japan. The fact that Rwanda invested early and led the world being a role model shows how this technology can be used to save lives. Now, they want to apply that same technology and infrastructure to all these other national priorities and we’re incredibly excited to support those efforts.”

As a capital markets squeeze, Revolution.Aero has made numerous mentions of investors’ tightening belts and squinting harder at potential returns. So, whilst capital can still be raised, as Lilium proved this week, investors seem to be more bullish about the large drone delivery space than AAM or UAM. A sentiment validated by Zipline’s most recent funding round too.

Cliffton told Forbes last year: “Most people think that advanced technology is going to start in the US and then trickle its way out to these other countries. That is not what we’re seeing.” Now having raised more than $900m across six rounds, with investors including GV, Katalyst Ventures and Reinvent Capital, Zipline’s bet on the ‘trickle-up economics’ of its autonomous drone technology looks to be working a treat.

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