Mon. Dec 6th, 2021

Venture capital investment updates

Investors have dumped a record $ 4.3 billion this year in the launch of electric air taxis, as many people hope to uncover ‘the next Tesla’.

Financing reached this level in the first eight months of 2021 from venture capital and the public markets through planned mergers with specialty ventures, Spacs, according to figures from McKinsey.

Spacs list on the stock market and then go look for a target company that you can merge with.

The money penetrated the emerging market funding for all types of the future solutions for air mobility, including drones, have risen by 83 percent over the past five years to more than $ 10.4 billion, the consultation said. The figures exclude non-public funding by strategic players.

It is one of the hottest markets, despite the fact that most new businesses do not yet have a flying prototype that can carry passengers. The excitement surrounding this new sector has drawn comparisons with the enthusiasm surrounding electric car companies, especially Tesla.

Peter Harrop, chairman of technology advice, IDTechEx, said parts of the air taxi industry have a promising future, but warned that billions of dollars have been invested by people who ‘want the easy money to find the next Tesla’.

‘We’re in a situation with a white heat where you can drive almost anything for billions. “We have companies that do not yet have a product that sells the dream and pays billions,” he said.

But there are signs that some of this exuberance may be on the wane, just as several high-profile air taxi companies, such as Lilium, Archer and Vertical Aerospace, are getting ready to be announced later this year.

Joby Aviation, which was listed on the New York Stock Exchange earlier this month by a Spac and Toyota counts among its supporters, rose less than expected.

However, Joby said the proceeds from its market debut along with cash on the balance sheet are enough to finance the business through initial commercial operations.

Co-founder Archer Aviation recently launched lowers its valuation by $ 1 billion in a revised agreement with Atlas Crest, the Spac with which he is preparing to merge. The groups said the change would be a more attractive entry point for investors.

A Joby Aviation aircraft outside the New York Stock Exchange during the company's initial public offering in the city
A Joby Aviation aircraft outside the New York Stock Exchange during the company’s initial public offering in the city © Michael Nagle / Bloomberg

Robin Riedel, partner at McKinsey, who leads the future of the consultant’s group for air mobility, said: ‘The enthusiasm we saw in the first quarter of the year has calmed down a bit.

“It is [due to] a combination of things: in general, the markets [become] less excited about Spac transactions; the range of players has expanded; and people accept that things like certification can be delayed. ”

Michael Cervenka, president of Vertical Aerospace, who in June unveiled preliminary commitments from Virgin Atlantic, American Airlines and rental company Avalon up to 1,000 air taxis for sale, told the Financial Times: “It’s a new space and with a little foam coming out, you expect redemptions.”

Martin Warner, founder of start-up Autonomous Flight, one of the smaller players, said it was’ inevitable that people would make an exchange first and fix it. I do not think there is anything wrong with that.

“You’re getting corrected, but I’m still optimistic that this industry is something else.”

Cervenka of Vertical Aerospace said there is ‘real value’ in ‘companies like ours publishing’.

“As our aviation and transportation change”, visibility, transparency and public trust were important, he said, and ‘part of it’ [trust] comes from the fact that he is a public company. “

Funding transactions were still coming through for companies, McKinsey’s Riedel added.

The biggest challenge for the industry remains certification by aviation safety regulators. Maria Algar Ruiz, manager of the drones program at the EU Aviation Safety Agency, said the regulator expects the “first commercial air taxi operations to take place in 2024-25”.

In the UK, Heathrow Airport and the City of London are working with Brazilian aircraft manufacturer Embraer and regulators to investigate how to redesign the region’s airspace to accommodate low-flying taxis safely. London City believes that by the middle of this decade it would be possible to set up an air taxi network.

The technology could possibly be used earlier in other countries: Singapore has promised to operate the world’s first commercial electric air taxi service by the end of 2023 in partnership with the German start-up Volocopter.

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