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UAVs will transform the U.S. commercial landscape

Nov. 4, 2013, Menlo Park, Ca. - Commercial drones will soon be populating U.S. airspace, and venture capitalists like Tim Draper are placing their bets.


November 4, 2013
By Olga Kharif Bloomberg

Draper, an early investor in Hotmail, Skype and Baidu Inc., is now
backing DroneDeploy, a startup that's building software to direct
unmanned aircraft on land mapping and the surveillance of agricultural
fields. Draper even expects drones to one day bring him dinner.

 

"Drones
hold the promise of companies anticipating our every need and
delivering without human involvement," Draper, 55, wrote in an email.
"Everything from pizza delivery to personal shopping can be handled by
drones."

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Venture investors in the U.S. poured $40.9 million into
dronerelated startups in the first nine months of this year, more than
double the amount for all of 2012, according to data provided to
Bloomberg News by PricewaterhouseCoopers and the National Venture
Capital Association. Drones are moving from the military, where they've
been used to spy on and kill suspected terrorists, to a range of
civilian activities.

 

Congress has directed the Federal Aviation
Administration to develop a plan to integrate drones into U.S. airspace
by 2015 and to move faster on standards for drones weighing less than 55
pounds.

 

It's not just startups that are anticipating the changes.
ConocoPhillips says that drones could be used to monitor ice floes and
marine mammals in the Arctic. Entrants could also include established
drone makers AeroVironment Inc., Boeing Co.'s Insitu unit and Israel
Aerospace Industries Ltd. in Tel Aviv, according to Bloomberg
Government.

 

Sales of civilian unmanned aerial vehicles, or UAVs,
will reach $8.2 billion within the decade, up from nothing today,
according to Phil Finnegan, director of corporate analysis at researcher
Teal Group, which tracks aerospace and defence.

 

"There's going to be a lot of growth in this market," Finnegan said.

 

While
the capital invested in drone-related startups has surged, it's still
concentrated in just a few companies. Three startups account for all of
the money raised in the first nine months of this year, compared with
five in all of 2012.

 

Draper backed DroneDeploy through his Menlo
Park, Calif.-based firm, Draper Fisher Jurvetson. Airware, a startup in
Newport Beach, Calif., raised $13.3 million earlier this year from
investors including Andreessen Horowitz, Google Ventures and First Round
Capital to develop customizable autopilots for UAVs that cost about
$4,500 to $7,500, according to the company's website.

 

Airware
found it much easier to attract the attention of venture capitalists
this year after testing the product with customers, said chief executive
officer Jonathan Downey.

 

The business of drones still carries
plenty of risks. UAVs will have to occupy parts of the airspace not used
by airplanes, and investors don't yet know what the rules will be.
Concerns over privacy are most notable given the history of drones as
tools used by the government and military.

 

The American Civil Liberties Union has warned of the possibility of a "surveillance society" spurred by drones.

 

"The
only way to avoid this dystopian future and prevent mass, suspicionless
searches of the general population is to ensure that information
collected by drones for one purpose cannot be used for another purpose,"
Allie Bohm, a strategist for the ACLU, wrote in an August blog post.