AAM Sector Secures More Than $5b In Funding In 2021
Technological challenges remain for the creators of the electric motors, engines and vehicles that will begin to fly under the banner of advanced air mobility (AAM), yet the funding investments reached impressive levels in 2021.
Completion of Vertical Aerospace’s going-public merger with blank-check company Broadstone Acquisition on Dec. 16 took the total announced funding raised in 2021 by the nascent advanced air mobility (AAM) industry to more than $5 billion.
Startups such as Vertical, developing electric vertical takeoff and landing (eVTOL) air taxis, accounted for the lion’s share of the fundraising, more than $3.7 billion. But pioneers in electric conventional and short takeoff and landing (eCTOL and eSTOL) aircraft as well as developers of enabling technologies raised significant funds over the year.
To put things into perspective, the space sector has raised $24.8 billion this year, according to venture fund Space Capital. The four mergers of eVTOL startups with special-purpose acquisition companies (SPAC) grossed more than $2.9 billion, a tiny fraction of the $138 billion that U.S. SPACs had raised this year through the end of October, according to Statista.
That said, the amount of funding raised is significant for aerospace and a substantial boost for the emerging AAM market. Based on figures compiled by SMG Consulting, at least half a dozen eVTOL developers now have the money to complete certification and begin production and operation of their aircraft–assuming the companies’ estimates of the funding required prove correct.
Credit: Vertical Aerospace
Leading the year’s fundraising drive were the four eVTOL SPAC initial public offerings. Joby Aviation’s August merger with Reinvent Technology Partners grossed $1.2 billion, including a $75 million investment from Uber. In September, Archer’s merger with Atlas Crest Investment grossed $858 million, while Lilium’s combination with Quell Acquisition grossed $584 million.
But the AAM SPACs did not perform as well as hoped, seeing shareholder redemption rates of 48-65% that significantly curtailed the funding raised. Vertical’s Dec.14 merger with Broadstone Acquisition saw 95% redemptions and raised $300 million only because the companies had arranged $200 million in debt financing as a backstop in the event of a high SPAC redemption rate.
There was one other SPAC in 2021 that is relevant to AAM. On-demand helicopter service provider Blade Air Mobility, which plans to transition to eVTOLs, in May raised $365 million through a merger with KSL Capital Partners. All of the AAM SPACs, including Blade, have seen their share prices drop since going public while Vertical was trending down from its opening peak on the New York Stock Exchange on Dec 16.
Also notable were the SPACs that have not happened.
Embraer says negotiations between eVTOL subsidiary Eve and SPAC Zanite Acquisitions continue. But German media reported in November that German eVTOL startup Volocopter had canceled plans for a going-public merger, quoting the company as telling existing shareholders the time was “extremely unfavorable for a successful SPAC transaction.”
Volocopter completed a $226 million private round in March, taking the total raised to $377 million, and the company says it “remains open to considering all forms of financing.” U.S. eVTOL startup Beta Technologies also has decided to stick to the private funding route for now, raising $511 million over two rounds in 2021.
Smaller early raises by France’s Ascendance Flight Technologies and Switzerland’s Dufour Aerospace rounded out the known eVTOL funding activity in 2021.
Combined, the announced financing deals by electric aircraft startups developing eCTOL and eSTOL regional air mobility designs exceeded $84 million in 2021, a much lower amount reflecting the lower maturity of the market relative to eVTOL and urban air mobility (UAM).
Among the bigger deals was Swedish eCTOL startup Heart Aerospace’s $35 million Series A round in July. Heart is developing the ES-19 all-electric 19-seat regional airliner. The round included investment from Bill Gates’ Breakthrough Energy Ventures and—along with aircraft orders—from United Airlines and its regional affiliate Mesa Airlines.
U.S. electric aircraft pioneer Bye Aerospace, France’s VoltAero and Aura Aero, U.S. electric seaglider developer Regent Craft and electric quiet propulsor startup Whisper Aero also completed early funding rounds over the year.
Surprisingly, the hydrogen-electric propulsion sector was even hotter in 2021. Universal Hydrogen (UH2) completed two funding rounds that raised $82.5 million, while ZeroAvia raised $72.3 million over three rounds. Both startups are developing hydrogen fuel-cell power train retrofits for regional aircraft.
Credit: ZeroAvia
Looking at AAM more widely, the drone delivery and unmanned cargo aircraft sector had the most active fundraising year after eVTOL air taxis, announced deals exceeding $385 million. The biggest was drone delivery pioneer Zipline’s $250 million Series C round in June, which will underpin the company’s expansion into the U.S.
U.S. drone delivery startup Volansi raised $50 million in June and Israel-founded Flytrex followed in
November with a $40 million round. Among developers of longer-range, higher-payload unmanned logistics aircraft, Elroy Air raised $40 million through a Series A round in August, while earlier in the year MightyFly secured $5.1 million in seed funding.
In another surprise, the aircraft autonomy sector proved especially active in fundraising in 2021. A total of $340 million was raised by three U.S. startups developing automated flight control systems, initially for retrofit and forward fit to existing fixed- and rotary-wing aircraft to reduce pilot workload and enable optionally piloted and fully unmanned operation.
Xwing raised $40 million in April and announced a collaboration with Textron Aircraft, Reliable Robotics raised $100 million in October and in November Skyryse raised $200 million and announced partnerships with five aircraft OEMs including Robinson Helicopters.
Despite predictions that funding would slow in 2022, January brought a new group of funding announcements.
Boeing announced it would invest $450 million in its Wisk joint venture with Kitty Hawk to develop and operate autonomous electric urban air taxis. The two companies, along with backing from Google cofounder Larry Page, forged the joint venture in 2019.
The additional Boeing funds will advance development of Wisk’s sixth-generation eVTOL vehicle, which is planned to be unveiled in the second half of 2022 and is targeted to be the first autonomous all-electric passenger aircraft certified in the U.S.
In a June 2021 interview with Aviation Week, Boeing CEO and President David Calhoun said, “Wisk is probably the highest on our list as a program I want to do and double down on. It’s electric. It displaces an incredibly inefficient market on urban mobility. It … virtually takes noise out of the equation.” His comment came within six months of Boeing closing its Boeing NeXt future transportation unit.
And one SPAC deal remains for early 2022. Embraer’s Eve Urban Air Mobility spinoff plans to merge with blank-check company Zanite Acquisition in a deal that values Eve at $2.4 billion, and backed by the largest conditional orderbook in the AAM market.
The deal is intended to gross $542 million to commercialize Eve’s AAM products and services. This includes $237 from Zanite and $305 million from investors that include Republic Airways, SkyWest, Azorra Aviation, BAE Systems and Rolls-Royce. BAE will also partner with Eve for a military mission study that could pave the way for development of military derivatives of the eVTOL.