Editor’s note: This article originally appeared on Flying.com.
There are plenty of ways to measure the success of drone delivery firms: trip volume, coverage area, regulatory approvals and so on. But if you’re looking at sheer value, one U.S. company reigns supreme.
China’s DJI holds the world’s highest valuation for a drone firm at $15 billion (though it depends who you ask). But San Francisco Bay Area-based Zipline is hot on its heels, having just raised $330 million at a $4.2 billion valuation — greater than any U.S. drone company or any drone delivery company globally.
“We recently closed our Series F funding round at an increased valuation, which involved several new and existing investors,” a Zipline spokesperson said. “We are well capitalized to continue to grow our operations, including launching our new home delivery service. We look forward to continuing to build the world’s first logistics system that serves all humans equally and brings faster and more environmentally friendly delivery to anyone, anywhere.”
First reported by Forbes, Zipline’s Series F raise brings its total funding to about $821 million. The company did not name a lead investor, but it said in a statement that the round included participation from both new and existing investors. The firm’s current backers include Sequoia Capital, Andreessen Horowitz, Google Ventures, Katalyst Ventures and a host of others.
“We look at Zipline as the future of robotics,” Andy Wheeler, general partner at Google Ventures, said. “We think it’s pretty clear that there is going to be a massive transformation in instant delivery over the next 10 years towards automation and zero-emission logistics. Zipline is at the forefront of that revolution and is poised to lead.”
Citing an April 10 filing in Delaware corroborated by two sources, Forbes reported that Zipline’s latest funding round — which concluded Friday — priced the company’s stock at $40.20 per share for a valuation of $4.2 billion, a 55% increase over its previous mark.
The filing also included a potential extension of $20 million, which would bring the total capital raised in the firm’s Series F to $350 million. That may or may not be baked into the round.
The timing of Zipline’s raise may not be a coincidence. It comes just over a month after the company announced its next-generation delivery system, P2, which will make use of small delivery “droids” in addition to drones.
Whereas current Zipline drones — or Zips — float their payload to the ground using a parachute, P2 will see the Zip lower a smaller droid, which can autonomously orient itself in the air, on a tether. That will allow the firm to deliver to tightly defined or hard-to-reach drop-off locations, such as a front doorstep.
P2 will also bring some helpful new hardware to partnering businesses. The biggest functions like a drive-thru window — Zipline’s droid can dock on a sled, sliding into the building to collect orders and back out to await pickup by a Zip. The system will also include a dual-use charging and docking station.
Zipline’s P2 Zips will have a maximum payload of 8 pounds and a maximum range of 24 miles, capable of completing a 10-mile delivery in 10 minutes. And what’s more, the drones will be able to land and charge at any dock in the network, effectively extending that 24-mile range.
This year, the firm will conduct around 10,000 test flights with 100 aircraft before rolling P2 out to customers. So far, there hasn’t been any update on when test flights will begin. But Zipline already has an array of partnerships in place to get it off the ground when the time comes.
One, a long-standing arrangement with the government of Rwanda that reached new heights in December, will use the P2 system to deliver in and around the nation’s capital, Kigali. Another fast casual restaurant chain, Sweetgreen, will facilitate P2 deliveries via Zipline’s marketplace. And two other U.S.-based firms — Michigan Medicine and MultiCare — will deliver prescriptions to hospitals, doctors’ offices and even patients’ homes.
That wide range of partnerships is what sets Zipline apart — and why the firm is valued so highly.
Given the regulatory gridlock taking place around U.S. drone laws, the firm smartly targeted early operations in sub-Saharan Africa, where restrictions are looser. It’s been flying in Rwanda since 2016 — long before any commercial drone operations popped up in the U.S. — and also operates services in Ghana, Kenya, Nigeria and Côte d’Ivoire.
The ability to fly its solution in authentic settings gives Zipline a massive advantage over many of its U.S. competitors, which have largely been limited to test flights in controlled environments. It’s given the firm proof of concept, which has likely helped it draw investors.
But it’s also served Zipline well from a regulatory standpoint. The firm currently owns the most expansive FAA Part 135 air carrier certification of any U.S. drone firm, one that allows it to fly over people, in controlled airspace and, most importantly, beyond the operator’s visual line of sight within a 26-mile round trip range.
It’s difficult to overstate how crucial that certification will be for Zipline moving forward. It’s not the only drone firm with Part 135 air carrier approval — Wing, UPS Flight Forward, Amazon Prime Air and Causey Aviation Unmanned are the others — but it has far more real-world experience than those companies.
So far, that’s translated to services in Utah, Arkansas and North Carolina. But there isn’t really a cap on where and how Zipline flies in the future, unlike, for example, Walmart and DroneUp, which are currently operating in seven states under an FAA waiver. Once it expires, DroneUp will need to either certify its aircraft or secure a new exemption to continue operating.
So while Zipline’s U.S. presence isn’t yet as robust as Walmart and DroneUp’s operation, it has the flight experience, regulatory approvals and financial backing needed to surpass it. That’s the formula for the highest valuation in U.S. drone delivery to date.