If you believe all the future visions for the drone market , a lot will soon be buzzing around us: drones with urgent medicines, those for inspecting suburban railroad bridges, police drones to monitor criminal priorities and of course thousands of delivery drones with parcels from Amazon. We as B10 have been looking at different drone startups for a year and a half, with a preference for software solutions. So far no one could convince us, but we have identified three areas in which drones become exciting.
Entertainment: Toys for the big
Last year I gifted myself with a DJI Mavic Pro and explored my surroundings. The business with this type of drone is not a business that is interesting for venture capital. The disruption potential is not great enough in the hardware market. The developments in the drone hardware, however, are evolution rather than revolution. Of course, things are still getting better, faster and safer, but there will be no more relevant players besides the already established manufacturers outside the niches. I believe in drones in the B2C area and as entertainment. But I do not see a B2B business that has potential for scaling.
Surveying and monitoring
The measurement of buildings, the inspection of storm damage or the monitoring of squares – these are exciting areas that will only be explored in the future. But always the question arises: Do I really need drones? What about satellites? Take a look at Planet or ICEYE or Axelspace. These are getting cheaper and better and better. Drones must be controlled by humans. It takes the plane to fly off and they are error prone. So not a mega-market that can be “disrupted”. The drones should not be the business, but means to an end, in order to realize business. Then the startup will also be interesting for VCs.
“THE DISRUPTION POTENTIAL IS NOT BIG ENOUGH IN THE HARDWARE MARKET”
Will the pizza be delivered by autonomous drone delivery in five years? Or is this a future scenario, as we know it from our parents in the 50s and 60s, when talking about flying cars? Although many are exploring this area, it is unrealistic that thousands of drones will soon be able to handle the logistics of the last mile. Other technologies will probably solve this more efficiently. Certainly there will be things like the often cited drug delivery in hard to reach areas of an alpine pasture or in less civilized areas of Africa. Here we are in a niche that is not a venture capital business case.
No B2B market in sight
So far, I do not see an area where drones can deliver a significant impact and thus be a game changer or category killer. The problems solved by drones are not a top-priority issue for potential B2B customers. Drone business startups should focus on either infrastructure hardware or drone management software or software for managing the entire process. As always, a real problem has to be solved. I believe in the technology: Yes. Do I think that this will make new ideas and services possible? Yes. I see a B2C mass market: Yes, maybe similar to selfie sticks or gopros. Do I see a scalable B2B market? – No, not so far. Something is coming to us. I’m curious.