Levitate Capital White Paper

The Future of the
Drone Economy
A comprehensive analysis of the economic potential,
market opportunities, and strategic considerations in
the drone economy
A Report From Levitate Capital
December 2020
i
Disclaimer
The information contained herein is intended for general informational purposes only,
does not take into account the reader’s specific circumstances, and may not reflect the
latest developments.
Certain information contained herein has been obtained from third-party sources,
which although believed to be accurate, has not been independently verified by Levitate
Capital. Further, certain information (including forward-looking statements and
economic and market information) has been obtained from published sources and/or
prepared by third parties and in certain cases has not been updated through the date
hereof. While such sources are believed to be reliable, Levitate Capital does not assume
any responsibility for the accuracy or completeness of such information. Levitate Capital
does not undertake any obligation to update the information contained herein as of any
future date.
Levitate Capital LLC disclaims, to the fullest extent, any liability for the accuracy and
completeness of the information in this document and for any acts and omissions made
on such information.
Levitate Capital has invested in a few companies mentioned in this paper, including but
not limited to Dedrone, Elroy Air, Matternet, Skydio, Skyports, and Volocopter.
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Contents
Executive Summary 1
Forecasts at a Glance 2
Purpose 4
Timelines 5
Introduction 7
1 Defense 8
1.1 Large Drones 11
1.2 Micro Drones 15
1.3 Defense Counter-Drone 19
2 Enterprise 28
2.1 Construction 37
2.2 Built Inspection 44
2.3 Agriculture 54
2.4 Enterprise Counter-Drone 62

iii
2.5 Oil & Gas 69
2.6 Real Estate 76
2.7 Utilities 80
2.8 Mining 90
2.9 Professional Videography 94
3 Consumer 101
4 Public Safety 109
4.1 Police 111
4.2 Firefighting 118
5 Logistics 122
6 Passenger Transportation 135
7 Conclusion 147
8 About Us 154
9 Acknowledgements 155
10 Appendix A: Key Terms 156
11 Appendix B: References 159

1
Executive Summary
$ Billions 90
40
15
2020 2025 2030
Global Market Fastest Growth
The global drone Enterprise will

economy will grow remain the fastest
from $15B to $90B growing segment
by 2030. until 2025.
Logistics will
become the fastest
after 2025.
Largest Segment Largest Region
Defense will Asia-Pacific will

remain the largest remain the largest
segment until non-defense
2024. Enterprise market through
will become the 2030.
largest after 2024.
2
Market Forecast at a Glance
Defense Enterprise Consumer

Market 29
Size
$ Billion 17 16
11
8
3 3 4 5
2020 2025 2030 2020 2025 2030 2020 2025 2030
Public Safety Logistics Passenger

Market 33
Size
$ Billion
3 5 3 2
0.7 <0.1 <0.1 0.1
2020 2025 2030 2020 2025 2030 2020 2025 2030
3
Geography Forecast at a Glance

The U.S. will remain the largest market for aerial drones when
defense spending is included.
Grey denotes countries where drones are banned.

4
Purpose
This report addresses three topics to help stakeholders navigate
1
uncertainty in the drone economy:
Value of the drone economy

Pragmatic forecast and analysis of the market for
drones by segments that show the most economic
potential
2 Factors influencing the drone economy

Overview of the uses of drone technology by industry,
forces that define how the market evolves, and trends
that provide growth opportunities
3 Strategies for success in the drone

economy
Guidance on how drone economy stakeholders
can create or capture value
5
Regulatory Timeline
This report assumes a steady regulatory progression from the Federal
Aviation Administration.*
August: Released
October: Launched June: Announced Part 135 guidelines for Tactical
UAS Integration Pilot certification to allow BVLOS** waivers to enable
Program to test BVLOS BVLOS flights over people public safety agencies to
operations with industry and at night operate BVLOS flights in
emergencies
2016 2017 2018 2019 2020
August: Released September: Rolled January: Required ADS-B

Part 107 to enable out LAANC to enable on all aircraft within 30
commercial drone on-demand drone flight miles of major airports
operations approvals
October: Granted UPS Flight

Forward first basic Part 135
operation certificate enabling
BVLOS deliveries with an
unlimited number of drone pilots
Roll out standards for drone Establish airworthiness Establish guidelines

integration into national airspace standards for drones of for BVLOS operations
to allow interactions with certain mass and without a waiver to
controllers and crewed aircraft capabilities to operate long allow long-range and
distance under FAA rules urban applications
2021 2022 2023 2024 2025 2026+
Roll out requirements Approve commercial drone Establish guidelines

for remote ID flights above 400 ft to for autonomous flight Grant first electric propulsion
allow long-distance transit to enable repetitive and airframe certifications for
operations surveying missions commercial human transport
without a pilot
*Regulatory references and assumptions in this report center around the United States Federal Aviation Administration (FAA)
because of the agency’s outsized influence on global aviation safety regulations.
**Acronyms, initialisms, and key terms listed throughout this report are defined in Appendix A.
6
Technology Development Timeline

This report assumes continuous development in drone aircraft technology.
Ubiquitous and improved

autonomous flight for system Build out of distribution
failure responses, dynamic hubs to load and receive
routing, and human and goods from drones
machine handoffs
2021 2022 2023 2024 2025
Initial introductions of Battery energy density

5G enterprise drones Roll out of UTM solutions of 400 Wh/kg
and integration with
crewed air traffic control
Battery energy density

First commercial operations of of 500 Wh/kg
passenger eVTOLs
2026 2027 2028 2029 2030
Initial build-out of vertiport

network infrastructure for
transporting people and cargo
7
Introduction
Stakeholders—government officials, regulators, drone
companies, corporate adopters, and investors—must understand
how the drone landscape is evolving if they want to expand the
current uses of the technology and create and capture additional
value.
To date, many market forecasts for price. The history of most emerging
drones have been overly bullish; technologies suggests that this lack of
moreover, many predictions of drones' differentiation is unsustainable. Prices
transformation of our skies have been will fall, margins will compress, and the
overhyped. The economic opportunity industry will consolidate behind those
for drone technology is large, but companies that provide the most
stakeholders must consider the tethers innovative, sticky, and value-added
of regulatory uncertainty, technological products and services.
barriers, and community acceptance
that ground it. This report identifies the challenges
drones are solving, highlights
The still nascent, $15 billion global opportunities and roadblocks affecting
drone economy has the potential to their adoption, and forecasts their
more than double in the next five years. economic potential. The report also
At present, hundreds of small and provides a pragmatic analysis of how to
medium-sized drone companies are strategize in the drone economy, employ
competing without sufficient drones effectively, and invest in drone
differentiation in their offerings and technologies.
Image from: FLIR; Black Hornet

8
1 Defense
Market Size
Year 2020 2025 2030
23 Progressive
14
$
14
Billion 17 Base
11.5
11 Conservative
8.1 9
9
1 Defense
As a result of growth in worldwide defense spending and
the race to develop air superiority, the defense sector
will remain the largest market and source of innovation
for drones over the next four years.
Uncrewed aerial vehicles have reshaped The growth in U.S. drone spending
modern warfare by allowing militaries to corresponds with the migration of
engage enemies precisely and gather artificial intelligence (AI) and robotics
intelligence without endangering the from Silicon Valley into the defense
lives of their solders. The U.S. sector. Over the next decade, AI will add
Department of Defense (DoD) has been new functionality to legacy platforms
the primary customer for multimillion- and enable humans to use robotic
dollar drones, and sustained U.S. systems to enhance troop safety and
defense spending accounted for roughly decision making. Future DoD spending
40% of the entire drone market in 2020. will eventually fund fleets of
autonomous assets across all branches
of the military.
Image from: Shield AI; Nova 2

10
1 Defense
U.S. military spending on autonomous systems is growing.
From reconnaissance to weapon and R&D is likely to increase over the
delivery, the future of military aircraft next decade, despite the ongoing wind-
will be increasingly autonomous. U.S. down of the MQ-9 Reaper and
defense spending on drone procurement retirement of the MQ-1 Predator fleets.
U.S. defense spending on autonomous systems has increased by an average of 7.6%

per year.
Procurement spending on uncrewed systems has grown by 70% over the past six years, from
$5.4 billion in FY2013 to $9.1 billion in FY2020.
1
Source: Wall Street Journal
$ Billions
10
0
2013 2014 2015 2016 2017 2018 2019 2020
Image from: Army Times; MQ-9 Reaper

11
1.1 Defense: Large Drones

Amid rising defense budgets, U.S. drone manufacturers face
strong competition in the “large drone” market from companies
in China and Israel.
The United States is not the only nation (MALE) drones, major drone providers
that is increasing defense spending. from China and Israel have increased
According to the Stockholm their manufacture and export of defense
International Peace Research Institute drones for foreign and domestic
(SIPRI), military expenditures are on militaries. The Missile Technology
the rise around the globe.2 Control Regime (MTCR) – formed in
1987 to limit the proliferation of missile
Although the U.S. has the largest fleet of technology – has been interpreted as
high-altitude, long-endurance (HALE) limiting the export of MALE and HALE
and medium-altitude, long-endurance U.S. drones.
Military spending by region from 2015- Top 10 military spenders in 2019

2019
The United States leads the world in military
Global military spending grew annually by an spending.
average of 3% from $1.67 trillion in 2015 to
Source: SIPRI
$1.91 trillion in 2019.
Source: Stockholm International Peace Research Spending Change World
Institute (SIPRI)
2
Country 2019 2019 Share
($B) (%) (%)
$ Billions United States 732 +5.3 38
800 China 261 +5.1 14
732
700 India 71 +6.8 3.7
596
600 Russia 65 +4.5 3.4
523
500 436 Saudi Arabia 62 -16 3.2
400 357 France 50 +1.6 2.6
328
300 Germany 49 +10 2.6
234 222
200 United
49 0.0 2.5
100 82 84 Kingdom
0 Japan 48 -0.1 2.5

2015 2016 2017 2018 2019 South Korea 44 +7.5 2.3
U.S. Asia-Pacific Europe MEA RoW
12

The U.S. is still the largest exporter of drones.
In July of 2020, the U.S. government from buying them under the MTCR.3 As
signed a measure to permit the sale of a result, near-term exports of MALE and
armed U.S. drones that fly under 800 HALE U.S. defense drones are expected
kilometers per hour, to foreign to increase.
governments that had been restricted
Defense UAV exports between 2015 and 2019

Although the U.S. led in quantity and value of UAVs exported, most exports were of small UAVs.
147 of the 171 ($405 million) U.S. UAVs exported were less than 500 kg in mass (Boeing
ScanEagle, RQ-21A, RQ-7, etc).
Source: SIPRI, Levitate Capital Analysis
Number of UAVs Exported Value of UAVs Exported

Region between 2015-2019 between 2015-2019
U.S. 171 $ 1,000,000,000
Asia-Pacific 117 $ 120,000,000
(China)
Europe 51 $ 84,000,000
MEA 111 $ 681,000,000
(Israel)
RoW - -
Image from: Shepardmedia; RQ-4 Global Hawk

13

The future of large defense drones is in stealth and combat.
MALE drones, such as the MQ-9 surveillance, and reconnaissance (ISR)
Reaper, currently fly in undefended drones like the RQ-170 and Northrup
airspace and operate at altitudes where Grumman’s RQ-180 for at least the next
they can be seen and downed; however, five years while also accelerating the
the airspace of future war zones may not retirement of aging unclassified
permit loitering MQ-9s. In 2020, the aircraft.6
U.S. Air Force announced it is winding
down service of the MQ-9 in favor of a Human-piloted advanced fighter aircraft
lower-cost replacement with “attritable” like the F-22 and F-35 are likely to reign
technology4 – low-cost, reusable, and supreme in aerial combat with
expendable technology that can be lost autonomous drones for the next decade.
in combat without concern of divulging However, military R&D investments in
top-secret engineering. new drones suggest that air superiority
may shift towards autonomous drones
Although the U.S. wants to avoid in the long term when advanced
incidents like the 2011 Iranian capture autonomous combat offerings develop
and eventual reverse engineering of the the situational awareness and
classified Lockheed Martin RQ-170 processing capacity needed to
Sentinel,5 the U.S. Air Force is likely to consistently outperform humans.
continue using stealth intelligence,
Image from: Gordo News; Kratos XQ-58A

14

Advanced militaries are investing in drones that extend the
capabilities of crewed aircraft at an attritable cost.
In July of 2020, the U.S. Air Force awarded Boeing,

General Atomics, Kratos, and Northrop Grumman
each a $400 million contract for the Skyborg
Vanguard program to further develop autonomous,
Kratos XQ-58A attritable loyal wingmen.
Kratos targets $2-3 million per aircraft depending on

the order size, compared to $85 million for an F-35.7
The U.S. Navy awarded Boeing a total of $890 million
to design, manufacture, test, and deliver seven MQ-
25s. The MQ-25, an aerial tanker intended to be
deployed from aircraft carriers to extend the combat
range of piloted strike fighters, is expected to begin
Boeing MQ-25
testing in 2021. The Navy is targeting a full
production run of 69 MQ-25s at a total cost of $13
billion.8
The United Kingdom’s Project Mosquito is expected

to select a design in early 2021 for its 2023 loyal
wingman drone for the Royal Air Force’s Typhoon
UK’s Project Mosquito and F-35A aircraft.9
Russia’s Sukhoi S-70 Okhotnik-B (“hunter”) is a large,

flying-wing, uncrewed combat air vehicle that can
launch deadly attacks, perform surveillance, and
execute electronic warfare. The aircraft can also be
Sukhoi S-70 Okhotnik-B
operated as a loyal wingman for the Sukhoi Su-57
advanced combat jet.10
15
1.2 Defense: Micro Drones

Defense micro drones are on the rise.
While large HALE and MALE drones because of their slow speeds, short
will continue to account for most battery lives, and fragility compared
worldwide defense drone spending, with fixed-winged alternatives.
defense arsenals will soon add more
compact rotary drones. Compact drones Improvements in rotary drone
are not new on the battlefield. The U.S. performance and the integration of
has deployed AeroVironment’s fixed- powerful onboard sensors have
wing RQ-11 Raven and RQ-20 Puma unlocked tactical use cases for military
drones at the battalion level for adoption. In February of 2020, the
midrange reconnaissance since the mid- Swiss Armed Forces chose Europe’s
2000s and 2010s, respectively. In May leading drone company, Parrot, to
of 2020, the U.S. Army awarded supply rotary drones for its Mini UAV
AeroVironment a $76 million Lethal program.12
Miniature Aerial Missile Systems
(LMAMS) procurement contract for its In August of 2020, the U.S. DoD’s
Switchblade drone, a back-packable Defense Innovation Unit (DIU)
loitering munition drone for beyond approved five U.S. made multi-rotor
visual line of sight (BVLOS) targets.11 drones for use in government
applications.
Rotary drones, however, have been
notably absent from military toolkits
Image from: U.S. Marine Corps; RQ-20 Puma

16

These five U.S. government-work approved micro drones also
compete in the commercial market.
13 14 15 16 17 18
Source: Skydio Parrot Altavian Teal Drones Vantage Robotics GSA Advantage
Skydio Parrot Altavian Teal Drones Vantage

Robotics
X2-D Anafi USA M440 Ion Golden Eagle Vesper
Flight Time 35 32 37 <50 32-50

(min)
Range (km) 10 4 3 3.2 28

Weight (lbs.) 2.75 1.1 3.8 2.3 2.2
Max Speed
(mph) Not listed 33 35 50 45
Operating
Temperature Not listed -35 to +43 -20 to +50 -35 to +43 -20 to +45
(°C)
Wind
Tolerance 25 28 20 26 27
(knots)
Sensors 4K60P HDR 2x 4K 2x 720P HD 4K 60FPS 2x low light
camera with cameras cameras Sony cameras with
16x zoom with 32x with 20x IMX412 18x zoom
zoom zoom camera
320 x 256 320 x 256
Thermal 320 x 256 320 x 256 320 x 256 Thermal
Imager with Thermal Thermal Thermal Imager
8x zoom Imager Imager Imager
Unit Price $10,200 - $21,600 $14,000 - $16,000 $12,300 $11,700 $7,000 - $7,300
17

Ground forces procurement contracts for micro drones could be
lucrative.
Small drones in the military are rapidly Modern military ground forces will
deployed situational awareness tools. likely acquire at least one rotary drone
They can be deployed to gain a bird’s eye per platoon to perform short-range,
view of the battlefield or to quick-look reconnaissance missions,
autonomously navigate a building to resulting in a total addressable market
clear rooms before troops enter. of more than 19,000 units for the U.S.
Army and U.S. Marine Corps (USMC).
Total costs to supply U.S. Army

and USMC units with micro $1.3B
drones
29%
The progressive case is one drone per
squad in a soldier-borne sensor
capacity, and the conservative case is
one drone per company.
Replacements are not included.
71% $400M
Source: Levitate Capital Analysis
35%
65% $60M
Squad Platoon Company

10 troops 36 troops 200 troops
U.S. Army U.S. Marines
Image from: Skydio; Skydio X2

18
1.2 Defense
Defense aircraft forecast methodology
In this market analysis, military drones In 2019, U.S. defense spending on

refer to aircraft designed to operate aircraft drones was $6 billion with more
alongside armed forces. These aircraft than 60%, or $3.7 billion, spent on
range from multi-rotor and hand- procurement.21 This report assumes
launched drones to jet aircraft. future U.S. defense spending will
maintain its historical procurement to
Comparing the total value of known RDT&E spending ratio. Investment in
drones acquired by the U.S. military drones has historically grown at roughly
over the past five years with known 7% per year since 201322 and drones
drones acquired by other nations, the have historically represented
ratio of drone procurement spending of approximately 3.5% of U.S. Air Force
other regions to the United States was and Navy procurement spending. This
determined to be 14% for Asia-Pacific, ratio is anticipated to increase by 0.25%
12% for Europe, 5% for the Middle East each year as autonomous aircraft play
and Africa, and 6% for the rest of the larger roles in future engagements.
world.
The conservative case assumes that
The forecast of future U.S. defense drone spending as a percentage of
procurement spending is based on the budgets will not grow over time. The
Congressional Budget Office’s projection progressive case assumes an accelerated
for U.S. Air Force aircraft reduction in the use of crewed aircraft
procurement.20 with an annual increase in drone
spending as a percentage of budgets by
0.3%.
Image from: Boeing; Boeing MQ-25

19
1.3 Defense: Counter Drone

U.S. defense tends to research counter-drone rather than
procure technology.
Faced with a dramatic uptick in attacks procurement, previous recipients of
from off-the-shelf drones on the CUAS R&D contracts and a small group
battlefield, the U.S. DoD poured billions of the highest performing CUAS
of dollars into counter uncrewed aircraft currently in use by the U.S. DoD will be
systems (CUAS). The vast majority of the primary recipients of future U.S.
spending are awarded to prime defense defense CUAS spending.24
contractors for R&D contracts. Testing
and R&D have accounted for almost all Going forward, all U.S. military
defense CUAS spending because many branches will synchronize on a common
of the more than 530 counter-drone architecture for evaluating, acquiring,
systems produced by more than 150 and interoperating emerging CUAS
manufacturers in 33 countries23 either technology on an annual basis. CUAS
offer unproven capabilities or perform companies that have not received U.S.
differently than advertised outside of a DoD contracts may explore
controlled environment. opportunities from other NATO member
defense departments or the smaller but
While future defense spending on CUAS growing commercial market.
will shift from R&D towards
U.S. DoD Spending on Counter Drone

The U.S. DoD. has been the largest customer for hardware and R&D in the counter-drone
market since the market’s inception.
Source: Bard College Drone Center, Levitate Capital Analysis
$1.49B
13%
$1.05B
87% 55%
$573M
35% $487M
35%
65%
45% 65% 83%
2018 2019 2020 2021E
R&D Procurement
20

Drone detection methods
Method Description Pros Cons
Radar Emits radio frequency pulses and • Detects drones from a • Difficulty detecting
collects the reflection off the long range small drones
drone • Identifies accurate • Provides a moderate
location of drones level of false alarms
• Detects multiple • Relatively expensive
drones at once
Radio- Scans for the frequencies on • Detects drones without • Less effective in busy
frequency which most drones are known to line of sight RF areas
(RF) operate • Performs • Ineffective against
independently of drones without RF
weather signals
• Detects multiple
Range
drones at once
Infrared (IR) Identifies and tracks drones based • Effective at detecting • Requires visual line of
on their heat signature drones without RF sight
signals • Less effective on
• Effective at night drones with minimal
• Detects multiple heat signature
drones at once
Electro- Identifies and tracks drones based • Records visual • Requires visual line of
optical (EO) on their visual signature evidence sight
• Detects multiple • Less effective at night
drones at once and in bad weather
• Can identify drone • Provides high level of
payloads false-alarm
Acoustic Uses microphones to detect • Detects drones without • Unreliable in a noisy

sounds emitted by drone motors line of sight environment
and matches them in a database • Detects multiple • Relatively short range
of known drones drones at once (up to 500m) for
• Detects fast moving detecting small drones
drones • Less effective against
• Effective against large quiet drones (fixed
drones wing)
21

Drone interdiction methods
Method Description Pros Cons
Laser Destroys vital segments of the • Effective at long range • Limited by weather
drone’s airframe using directed • Effective against small conditions
energy, causing it to crash to the and fast moving • Results in uncontrolled
ground crashes
• Must linger on target to
take effect
RF/GNSS Generate RF interference to • Can interdict multiple • Can affect neighboring

Jamming disrupt the radio frequency link drones at once radio communications
between the drone and its • Effective at • Can result in
operator/ Disrupts the drone’s medium/long range unpredictable drone
satellite navigation link to cause it behavior
Range
to hover in place, land, or return

home
High Directs high intensity microwave • Can interdict multiple • Can disrupt or destroy
Powered energy at a drone to disable its drones at once friendly electronics
Microwaves internal electronic systems • Instantaneous effect • Difficult to predict
(HPM) • Effective against outcome
drones without RF
signature
Spoofing Feed a drone malicious • Controlled interdiction • Short range

communication to take control of drones • Can affect other radio
communications
Nets Designed to entangle the targeted • Lower risk of collateral • Short Range
drone and/or its rotors damage • Relatively slow
• Effective against reaction
drones without RF or
GNSS links
• Relatively low cost
22

Defense customers deploy a combination of various CUAS
technologies.
The most promising military only used as military solutions for the
opportunities in drone interdiction foreseeable future.
(removal from airspace) are laser and
high-powered microwave technologies. Each drone detection and interdiction
Lasers can eliminate long-range drone method come with benefits and
threats with great precision, but they tradeoffs. The most effective solution for
need to linger on a target momentarily militaries is a combination of counter-
before disabling it. High-powered drone interdiction methods to protect
microwave weapons fire electrometric their many assets.
radiation to fry internal circuits, and
their broad firing arcs makes them Some details about military counter-
effective against autonomous drone drone equipment capabilities are kept
swarms. Lasers and microwave confidential in an attempt to keep
technologies have the potential to adversaries unaware of drone attack
devastate neighboring electronic defense mechanisms.
systems used for civilian operations. As
a result, these technologies will likely be
Image from: Defense.gov; DJI Mavic Swarm

23

Military CUAS forecast methodology
This analysis assumes that all 260 of the amphibious ships (32), and aircraft
U.S. Military’s large and medium sites carriers (11)27 are anticipated to require
worldwide25 and all 273 U.S. diplomatic CUAS technology.
posts26 are in the market for counter-
drone technology. (Large and medium For ground troops, this report assumes a
military sites are installations of more total addressable market for vehicle-
than $1 billion in value.) based solutions at the battalion level
(400-1,000 soldiers) and for mobile
In addition, all of the U.S. Navy’s fleet of setup and hand-held solutions at the
large-surface combatants (89), company level (100-200 soldiers).
Estimated defense Global Per system

Defense
CUAS detection Addressable Hardware
Customer
hardware cost per Market Cost ($)
installation Key Military
1,000 $5,000,000
Hardware pricing estimates Posts
include necessary RF
sensors, pan-tilt-zoom Vehicle Based 10,000 $1,000,000
(PTZ) cameras, radars, and
jammers for base-level
coverage Hand-held 20,000 $40,000

Diplomatic
7,300 $50,000
Posts
Image from: Dedrone; DroneDefender

24
1.4 Defense: Government

Government agencies are significant early customers for the
drone economy.
Venture capital investors have long been companies in the drone economy.
wary of the U.S. defense sector. The fast- Unlike many software businesses that
burn lifecycles of venture capital-backed have high margins and offer ease of
companies mean they can exit the scalability, government contracts help
market via acquisition or liquidation fund the necessary upfront investments
before completing the federal that allow hardware businesses to build
government’s multi-year contracting a scalable product for the enterprise and
and procurement process. In addition, consumer market. In this regard,
DoD requirements can be burdensome government funding can supply an
for small businesses to meet and have essential source of non-dilutive, early-
the potential to divert resources away stage capital that capital-intensive
from long-term planning initiatives. businesses need to address barriers to
entry.
However, capital-intensive businesses
need large customers to scale, and when As an example, NASA and the U.S. Air
it comes to procurement, the U.S. Force were the primary customers of
government is as large as it gets. small businesses in the nascent
Defense investments are, therefore, an semiconductor and computer industry
essential source of fuel for hardware in the 1960s.28
Image from: U.S. Marine Corps; RQ-21 Blackjack

25

The U.S. government has a history of jumpstarting capital-
intensive businesses.
More recently, we have seen the impact Horowitz and Founders Fund, which has
of government support in space raised over $200 million with an almost
companies like SpaceX, whose $2 billion valuation by demonstrating
innovations have been primarily funded success in partnering with the
by contracts from its largest customer, Department of Defense and Homeland
NASA. According to the Space Angel’s Security.30
2019 Report on U.S. Government
Support of the Entrepreneurial Space Anduril, founded by Palmer Luckey,
Age, NASA’s commercial contracts have builds technology for military and
fueled the growth of 67 aerospace border security and has more than $100
companies with $7.2B in public funding million in contracts listed on a federal
between 2000 and 2018.29 database,31 including an almost $36
million contract from the U.S. Customs
Today, we see the impact of government and Border Protection (CBP) in
customers in technology companies like September, 2020 for its AI-powered
Anduril, backed by Andreessen autonomous surveillance towers.
Image from: LA Times; Anduril Ghost 4 UAS

26

U.S. companies have many avenues for gaining government
support.
U.S. companies that will be a part of the within the DoD, such as the Defense
drone economy of the future stand to Innovation Unit, the Army Futures
benefit from early-adopter funding from Command, the National Security
the U.S. federal government and U.S. Innovation Network, the Strategic
DoD. Capabilities Office, NavalX, AFWERX,
and SOFWERX, aim to facilitate fast-
The DoD is increasingly seeking moving enterprise collaboration with the
emerging capabilities from sources U.S. DoD.
outside of the traditional military-
industrial base. Entities like the Small These programs provide an avenue for
Business Innovation Research (SBIR) U.S. government investment in U.S.
program enables small businesses to innovation but the best government
engage in federally funded R&D projects support model is to drive large demand
with commercialization potential. Small- for innovative drone technology.
scale innovation and development units
Image from: Shield AI

27
1.4 Defense:
Strategies for succeeding in the defense drone segment
Strategy Reasoning
• Provides direct access to relevant networks that

are essential for key introductions and for
Add talent understanding the end-user’s mission
with defense requirements.
Talent procurement
experience to • Informs the team of the necessary registrations
your team and compliances to be eligible for government
contracts.
• Enables better assessments on whether existing

Focus
capabilities, products, and relationships meet the
marketing of
requirements of specific programs or tenders.
specific
products and
Marketing • Larger budgets do not necessarily translate to
services to
greater opportunities. Solutions that directly
targeted
address the customer’s requirements are more
customers
likely to gain traction.
within defense
• Working backward from the final price to develop

Use a market-
a product cost structure will help deliver products
based pricing
that meet performance requirements at the
strategy for
targeted price.
Pricing contracts
where cost is a
• Results in a competitive cost advantage over rivals
significant
and a more focused product.
factor
28
2 Enterprise
Market Size
Year 2020 2025 2030
36 Progressive
$
Billion 29 Base
21
16 15 Conservative
3.4 10
1.9 Progressive
Shipments 1.2 1.5 Base
Million*
1
0.9 Conservative
0.4 0.7
*Includes public safety units.

29
2 Enterprise
Enterprise is the fastest growing segment of the drone
economy today and has already surpassed the consumer
market to become the largest non-defense market for
drones.
The enterprise drone market is were among the earliest markets to
composed of drone hardware, software, adopt drones. These three segments
and service companies that create therefore have large ecosystems of drone
products for commercial and industrial products and services uniquely suited to
applications. While the nine segments address their pain points.
highlighted in this report are not an
exhaustive list of enterprise applications Although defense will continue to be the
for drones, they are the largest largest sector for drones over the next
commercial markets where drones are several years, technological
deployed. advancements from defense-funded
R&D are likely to spawn more capable
Construction, built inspection, and civilian drone technology that will
agriculture are the top three largest accelerate adoption in the enterprise
segments for enterprise drones. They sector.
Enterprise Market 2020 Enterprise Market 2025

Construction $1.9B $8.5B
Built Inspection $0.4 B $1.9B
Agriculture $0.3 B $1.8B
Counter Drone $0.2 B $0.9B

Oil & Gas $0.2 B $1.2B
Real Estate $0.1 B $0.6B
Utilities $0.1B $0.7B

Mining $0.1 B $0.4B
Videography $0.1 B $0.6B
30
2 Enterprise
The enterprise drone segment is still in early stages.
Although consumer drones have been the enterprise drone market in the
on the market since at least 2013, before United States has grown variably within
2016 flying drones in the United States large established programs and small
for commercial purposes was severely pilot programs.
restricted, if not illegal. In 2016, the
Federal Aviation Administration (FAA) For drone companies, the cost of
released legislation 14-CFR Part-107 to educating end markets of the benefits of
formally expand drone use to drone use remains high. Indeed, the
commercial operations.
1 pace of enterprise drone adoption
worldwide has been slower than
Since then, more advanced drones and anticipated due to the thorough security,
industry-specific software have proven operations, and return-on-investment
evaluations businesses undergo before
to be extremely effective at improving
adopting new technology.
enterprise operational efficiencies, and
Image from: Verizon 5G

31
2 Enterprise
The enterprise drone industry is addressing the technical and
regulatory barriers required to scale.
Today, most enterprise drone programs technologies mature and as regulations

are still in their infancy. They are still grow increasingly flexible.
identifying the applications for drones,
the types of data to collect, and the In-house drone programs have
software and storage solutions required demonstrated their ability to improve
to gather and manage drone-gathered operational efficiency over traditional
data. Many potential enterprise drone methods, but many programs do not
users are ill-equipped to store and bring a sufficient return on investment
analyze the terabytes of data drones because they consist of ten or fewer
collect. drones instead of the hundreds of
drones required to scale.
Most current pilot programs require
drone operations to be conducted within By the end of the decade, completely
visual line of sight. Over the next five autonomous fleets of drones will be fully
years, however, more Beyond Visual integrated into existing Internet of
Line of Sight (BVLOS) requests will be Things (IoT) ecosystems.
approved as detect-and-avoid
Enterprise drones are still early in the technology adoption lifecycle.

Continued success and lessons learned from early adopters will encourage an influx of the
“early majority” over the next four years and the “late majority” after 2025.
Current Enterprise
Drone Market
Early Majority Late Majority
Early Adopters Laggards
Innovators
2% 14% 34% 34% 16%
Percentile of adopters
32
2 Enterprise
Nascent enterprise drone programs will expand as costs come
down.
In the short term, hardware sales will Prices of drone hardware, software, and
maintain a robust market share of the services will continue to fall as drone
enterprise drone sector as end users and companies compete for market share
service providers build out their fleets. through penetration pricing. Improved
However, hardware and data collection drone autonomy and continued growth
services will become commodities over in the number of licensed, gig economy
the long term as more drones drone pilots will further lower the cost of
autonomously execute tasks. Pricing drone adoption. This trend will improve
competition among hardware and the return on investment for enterprise
service providers will allow drones and encourage more businesses
differentiated software providers closest to expand pilot programs over the next
to the end-user to capture the most few years.
value from enterprises.
FAA forecast of registered Thousand

1197 Progressive
commercial drones in the U.S. 1200 1136
1031
2
Source: Federal Aviation Administration
830
800 786
828 Base
731
594
633 Conservative
567 586 598
507 535
400 385
467
0
2019 2020 2021 2022 2023 2024
Image from: Vjeran Pavic, Verge, Parrot ANAFI

33
2 Enterprise
Companies seeking to launch a pilot drone program should first
consider the data, economics, and regulations.
Enterprise drones complement existing continue to focus on a limited number of

ecosystems of enterprise tools, applications that address critical
addressing challenges uniquely suited problems affecting the bottom line.
for aerial robots. Businesses must have a
data management plan for processing Businesses must also recognize that
and analyzing torrents of data, along many regions restrict drones from flying
with a work process integration plan close to airports, over congested areas,
that will enable them to extract the most and above people and property
economic value out of their drone uninvolved in the drone's operation.
programs. Successful programs will
Data Economics Regulation

Identify the types of data Identify the economic rate of Understand regulatory
necessary to collect and return of a drone program and requirements for when,
the process drones weigh the tradeoffs of having an where, and how to operate
should follow to collect outsourced, hybrid, or in-house drones.
that data more efficiently operation.
than existing methods.
34
2 Enterprise
Companies should engage all necessary stakeholders to develop
a strategy for operating a drone program.
In all enterprise segments, local Companies employing drones must

ordinances on privacy, trespassing, engage and communicate with all
nuisance activities, intellectual property stakeholders to clarify how drone-
rights, and contractor licensing may collected data will be collected and used
directly apply to commercial drone and to establish trust that this data will
operations. Businesses may need to not be used for any form of retribution.
notify and obtain written consent and
releases from workers and site visitors
to avoid infringement of reasonable
expectations of privacy.
Companies must decide if they want to operate a drone program as a third-

party outsourced, hybrid, or in-house model.
Third-party Hybrid In-house

benefits benefits benefits
• Offers specialized • Allows control over the
expertise and requisite. • Enables operation of in- hardware, software, and
• Requires the least house drones with leased process used.
amount of hardware. • Requires higher
implementation time • Allows testing of new expenditures initially but
and resources. technology without results in long-term cost
committing to a large savings.
investment.
35
2 Enterprise
All U.S. commercial and public safety drone operations must
follow (or exceed) Part 107 rules.
To operate the controls of a drone under Part 107, an individual must:
o Be at least 16 years old.

o Have the ability to read, speak, write, and understand English.
o Be in physical and mental condition to safely fly a drone.
o Pass the initial aeronautical knowledge exam.
To maintain a remote pilot certificate, a pilot must:
o Have certification accessible during Uncrewed Aerial System (UAS)

operations.
o Pass a recurrent knowledge test every two years.
The U.S., United Kingdom, and Australia impose similar restrictions on drone flights.
United
United States3 Australia5
Kingdom4
Visual line-of- Visual line-of- Visual line-of-

Sight
sight only sight only sight only
Pilot per drone 1 1 1
Maximum 400 ft. above 400 ft. above 400 ft. above
altitude ground ground ground
Only people Not within 150 No flight over

directly meters of congested area
Flight over people participating in congested area
the operation
36
2 Enterprise
Strategies for succeeding in the enterprise drone segment
Strategy Reasoning
• Software and hardware incompatibilities narrows the

sales funnel of a drone company.
• A community of developers will build an ever-expanding

Cultivate
library of functionality that creates additional value for
Positioning an
the end-user.
ecosystem
• As the enterprise market matures, revenues and profits
will shift toward software and turnkey solutions.
• Eases adoption frictions and builds relationships quickly

to gain mindshare and grow network of potential users.
• The team will better understand the busines outcomes

customers seek and learn how to shape the offerings to
Cover the
effectively facilitate those outcomes.
Support customer’s
first trial
• Customer service matters. Quality of customer service is
equally weighted with price and capabilities as
important factors for enterprise end-users when
deciding between services.
• Maximizes the lifetime value of the customer by

tailoring to their needs:
• Basic Tier: Penetration pricing of essential
features that directly addresses the customer’s
core problems at an affordable price.
Use a
• Standard Tier: Competitive pricing of core
tiered
Pricing features that include all of the basic offerings
pricing
with features that delight and retain.
structure
• Premium Tier: Margin expansion pricing of the
latest and most advanced features for large
enterprise customers who are heavy users and
have prior experience with the product.
37
2.1 Construction
The architecture, engineering, and construction (AEC)
industry will remain among the largest sectors of the
global enterprise drone market through 2030.
The construction industry has a construction, the construction sector is

reputation for schedule and budget the largest enterprise market to employ
inefficiencies. Large projects typically drones.
take 20% longer to complete than
scheduled and can exceed budgets by up Instead of accelerating the retirement of
to 80%.1 surveying and mapping professionals,
drones have proven to be practical tools
Drones are improving the efficiency of that enhance the quantity and quality of
construction operations by transforming services that existing professionals
how construction firms survey land, provide. Moreover, new AI-powered
monitor progress, and mitigate safety software helps construction teams
risks. As a result, although construction- accurately plan construction sites,
based drone revenues directly correlate quantify resources, and manage on-site
to boom-and-bust cycles in equipment.
Image from: Ivan Bandura Unsplash; FLIR MUVE C360

38
2.1 Construction
The majority of drone revenues in the construction industry will
come from software and services.
Lean construction firms run asset-light majority of annual AEC-related drone
operations and typically lease revenues in the long term.
equipment on a project-by-project basis.
Over the long term most construction On construction sites, drones are
firms will outsource their drone already transforming topographic
operations to providers that offer mapping, land surveying, equipment
autonomous data collection bundled tracking, remote monitoring, site
with data management and analytics. security, personnel safety, and structure
Consequently, drone software and inspection.
services are likely to represent the
Revenues from hardware vs. 100%

software and services
Software and services are expected
to make up 75-80% of the 75%
construction market in the long

term. Software & Services
Source: Levitate Capital Analysis 50%
25%
Hardware
0%
2020 2030
Market Size
14 Progressive
$ 10
11 Base
Billion
8.5
6 Conservative
1.9 5
2020 2025 2030

39
2.1 Construction
Remote monitoring and progress reports
Aerial drone photography gives remote stakeholders and managers visibility into a
project’s progress while improving on-site communication and collaboration among
teams to reveal construction errors and monitor progress. Sophisticated software can
create millimeter-accurate digital twins of projects to validate constructed work against
3D models.
Topographic mapping and land surveys
Drones can repeatedly and accurately map out terrains to determine terrain feasibility
with construction plans. Drones can survey acres of land at a fraction of the cost and
time required to produce topographic maps by helicopter or land. Construction teams
can perform project planning using 3D models, gaining a detailed understanding of how
the project will practically and aesthetically impact the local area before beginning
construction.
40
2.1 Construction
Structure inspection
Drones provide detailed, high-resolution quality assurance inspections of structures

during construction without the use of scaffolding. Drones equipped with thermal
sensors can detect leaks, electrical issues, and other anomalies, capturing data that helps
determine if work is meeting project specifications.
Personnel safety
According to the Occupational Safety and Health Administration (OSHA) and the
Bureau of Labor Statistics, one in five worker deaths in the United States in 2018 was in
construction. Moreover, falls (33%) are the leading cause of construction worker
2
deaths.
Drones can capture data in dangerous and challenging-to-reach locations faster than
humans while mitigating fall risks, chemical exposure, and heat exposure. In addition,
drones allow construction managers to monitor safety concerns on an ongoing basis to
reduce the risk of accidents.
41
2.1 Construction
Equipment tracking
Drones can track equipment locations and direct and guide construction vehicles. For
large construction sites with a diverse range of equipment, drones help managers
monitor and orchestrate where resources are deployed and identify whether the right
assets and materials are available on-site.
Security
Between $300 million to $1 billion worth of construction equipment is stolen every year.
The ability to monitor construction site perimeters dramatically increases on-site
3
security.
42
2.1 Construction
Drones enable “remote construction,” but AEC drone use faces
long-term challenges.
The impact of COVID-19 on the In Saudi Arabia, drones helped
construction industry varies across construction projects related to Saudi
regions and projects. Whereas some Vision 2030 stay on schedule.5
projects have experienced supply chain,
workforce, and financial disruptions, Many accelerated construction projects
other infrastructure projects have been are already funded. However, other
expedited, taking advantage of regions facing reduced tax revenues and
reductions in traffic.4 smaller budgets have frozen spending
and paused construction projects. In the
For some construction projects, the long term, slow GDP growth, high
pandemic has led to a reduction in the unemployment, and stalled commercial
number of workers on site and projects will challenge the global
accelerated the adoption of drones as construction market. While drone
tools to continue operations, monitor operations can ultimately reduce
progress, and improve worker safety. resources and save money, construction
companies facing a liquidity crisis may
not be able to make an initial investment
in a drone program.
Image from: Wingtra

43
2.1 Construction
Construction forecast methodology
Construction managers are the primary complex tasks. We thus estimate the
decision-makers for drone adoption on cost at ~$10,000 per unit.
construction sites. While multiple
construction managers may use Construction firms typically have
numerous drones on each site, we projects distributed across multiple
conservatively estimated a total regions and are likely to outsource drone
addressable market of one drone for operations to regional service providers.
each of the 476,000 construction Service rates per user are an estimated
managers in the United States.6 $400 per week, or roughly $21,000 per
Asia-Pacific, the Middle East and Africa year. Drone data and software services
(MEA), and the rest of the world have are an estimated $300 per month, or
substantially larger construction $3,600 per year.
workforces than the U.S. and
appreciably smaller IoT ecosystems to The conservative case portrays a
support drone operations. As a result, COVID-induced contraction in
these areas may have smaller drone-to- construction projects worldwide that
manager ratios. While many operators curb drone investment and limit market
opt for a base DJI Phantom or Skydio 2- growth to a mature rate. The progressive
like drone to handle simple photography case illustrates an increased reliance on
tasks, our model acknowledges that at drones for remote construction wherein
least half will use specialized drones drones become as ubiquitous on
equipped with GPS modules and construction sites as excavators.
advanced sensors to complete more
Estimates of the TAM for construction drones

Construction Drone to Manager

Region TAM of Drones
Managers Ratio
United States 476,000 1 476,000
Asia-Pacific 4,110,000 1:5 822,000
Europe 400,000 1 400,000
MEA 820,000 1:5 164,000
RoW 1,680,000 1:5 336,000
44
2.2 Built Environment Inspection

Built environment inspection (BEI) by drones is limited
only by restrictions on where drones can operate. More
BVLOS approvals, improved autonomy, and powerful
data analytics will allow BEI to remain one of the largest
markets for enterprise drones through 2030.
In this analysis, BEI refers to the environments are hampering growth in

inspection of bridges, railways, and this space.
completed buildings. The amount of
built infrastructure worldwide that Today, most BEI activities are part of
requires routine inspections makes pilot programs in local departments of
drone-based inspections a lucrative transportation, railway companies, and
business; however, restrictions on flying insurance companies. This segment will
drones over people and urban proliferate once favorable regulatory
changes occur.
Market Size
6.3 Progressive
$
Billion 5 Base
2.6
1.9 2.3 Conservative

0.4 1.3
2020 2025 2030
Image from: New York Times; DJI Phantom

45
2.2 BEI: Railway Inspection

Railway operators employ some of the largest fleets of drones in
the U.S. and Europe.
Federal Railroad Administration track the U.S., private freight companies are
and bridge safety standards require the principal acquirers and operators of
bridges to be inspected yearly and some railway inspection drones. These drone
networks of main tracks and sidings to deployments inspect railway radio
be inspected weekly.1 towers, bridges, and remote railway
networks. The largest railway companies
The private freight rail industry owns in the United States by revenue, BNSF2
the vast majority of the nation’s 140,000 and Union Pacific,3 spend more than $2
miles of tracks in the United States. In billion annually on infrastructure
maintenance.
Remotely identify
visible rail and
Monitor overhead lines supporting
for damages after infrastructure defects
severe weather events
Inspect vegetation,
track ballast, fasteners,
and switches for
corrosion or missing
components
46

Drones enable on-demand inspections of remote railway assets.
In partnership with the FAA’s that require BVLOS approvals for each
Pathfinder Program, BNSF uses mission.
rotorcraft drones equipped with high-
definition cameras to inspect railway Railway inspection drones are on track
bridges and assess railway network to becoming commonplace fixtures
conditions after destructive weather along significant railway routes. In the
events.4 BNSF inspects more than near term, autonomous inspections will
32,500 miles of its railway across the be performed by strategically positioned
U.S. twice a week and uses drones to “drones-in-a-box,” drones that deploy
reduce the cost and difficulty of from and return to self-contained
inspecting track hundreds of miles away landing “boxes.”
from major population centers.5
As autonomous drone railway
Unlike BNSF, many companies using inspections become widely available,
drone-based railway inspections in asset-light railroad operators that do not
Europe and the United States are still want to manage a distributed team of
running pilot programs that have yet to drone monitors will likely scale down
scale. The primary inhibitor of growth is their internal drone programs in favor of
thousands of miles of railway networks an outsourced model.
47

Railway inspection forecast methodology
Restrictions on BVLOS flights limit The conservative case assumes delayed

drone-based railway inspections. A approval for nationwide and worldwide
significant portion of railroad tracks is BVLOS missions (beyond 2024),
located in rural areas. We estimate confining most drone-based inspections
approximately 75% of railroad tracks are to railway bridges and towers.
rural. As a result, 75% of the 640,000
miles of railroad tracks worldwide can The progressive case assumes major
be inspected by drones, and we railway companies worldwide will
calculated the total addressable market successfully deploy BVLOS inspections
based on the assumption that a drone throughout their rural railway networks
can inspect up to 40 miles of track per before 2024.
day.
Estimates of the TAM for railway inspection drones

Railway Inspected Drones per Mile

by Drone (Miles) of Railway
United States 105,000 1:40 2,600
Asia-Pacific 135,000 1:40 3,400
Europe 120,000 1:40 3,000
MEA 30,000 1:40 750
RoW 90,000 1:40 2,250
Total 480,000 12,000
Market Size
240 Progressive
$
170
200 Base
Million
150
130 Conservative
100
30
2020 2025 2030

48
2.2 BEI: Bridge Inspection

Aging bridges around the world create an inspection backlog
that drones can resolve cost effectively.
The tragic August 2018 collapse of the highway bridges that exceed 20 feet in
Ponte Morandi bridge in Genoa, Italy, length.8
drew increased attention to aging bridge
infrastructure worldwide.6 Of the Current manual methods of bridge
615,000 bridges in the U.S., 40% were inspection are inherently slow. In
built more than than 50 years ago, and addition, the frequency of bridge
more than 9% are considered inspections worldwide is likely to
structurally deficient.7 National Bridge increase due to replacement
Inspection Standards (NBIS) require infrastructure project delays.
safety inspections in the U.S. at least
once every 24 months for public
Drones can reduce the cost of bridge inspections by more than 60%
Launching costs Drone UBIV

Drone (Skydio 2 - Matrice 250) $2,000-$10,000 Truck (43 ft. Truck mounted platform) $600,000
Cost of equipment $5,000 Annual upkeep cost $40,000

(Batteries, case, cameras, etc.) (fuel, maintenance & insurance)
Training & certification $550 Renting a truck (daily) $2,000-$3,500
First year total (own the drone) $8,000-$16,000 First year total (own the truck) $640,000
Inspection costs Drone UBIV

Hourly amortized purchase cost $8-$16 Hourly amortized purchase cost $50
(1,000 hrs.) (10 years, 20,000 hrs.)
Bridge engineers (x2) per hour $200 Bridge engineers (x2) per hour $200
Inspection time (hours) 1 Inspection time (hours) 8
Data storage and analysis $1,000 Documentation $100

(Per day of capture) (Per day of capture)
Lane closure expense 0 Lane closure expense (varies) $1,500
Total per bridge ~$1,220 Total per bridge ~$3,600-$5,300

49

Most state departments of transportation in the U.S. use drones.
Ground crews perform manual bridge are increasingly executing autonomous

inspections by walking along bridge inspection missions on-site.
maintenance paths with sensors and
mirrors, rappelling in harnesses along Of the 50 state departments of
the sides of bridges, or dangling over the transportation in the United States, 36
sides of bridges in under-bridge are operating internal drone programs
inspection vehicles (UBIV). with 279 FAA certified drone pilots on
staff.9
Drones are becoming standard
equipment onboard utility trucks and
72% of U.S. state departments of transportation had state funded drone operations
in 2019
10
Annual spending on bridge inspections in the United States totals more than $2.7 billion
Source: American Association of State Highway and Transportation Officials (AASHTO)
50

The benefits of drone-based bridge inspection will spur
expansion of current drone programs.
State departments of transportation in In the short term, more state
the U.S. use drones for surveying and departments of transportation will
emergency response. However, their follow North Carolina’s lead and seek
main use of drones is for bridge FAA approval to conduct BVLOS bridge
inspections where they realize up to 70% inspections using sophisticated drones
in cost savings. like the Skydio 2.11
Depending on bridge size and length, Due to the ease of operation afforded by
drones take up to approximately one autonomy, most state transportation
hour to collect data for flow into 3D departments will continue to acquire
models, which are analyzed remotely for and operate drones internally.
corrosion and other signs of failure and
anomalies.
Inspect difficult to reach

areas while keeping
personnel safely on the
ground
Inspect underside of
bridges without rope
access or UBIVs
51

Bridge inspection forecast methodology
More than 5.2 million major roadway The conservative case assumes bridge
bridges in the world require periodic and roadway inspection remains limited
inspection. To calculate the total to a few regions due to slower-than-
addressable market, we assumed that anticipated (beyond 2024) nationwide
each bridge undergoes inspection every rollout of BVLOS inspection flights.
two years; that there are an average of
120 inspection days per year; and that The progressive case assumes that
each inspection requires an average of drone-based bridge inspection will be
two drones. We applied a per-inspection widely adopted by 2025 and become an
cost of $1,200 for outsourced bridge industry standard by 2030.
inspection services.
Estimates of the TAM for bridge inspection drones

Source: American Society of Civil Engineers, Levitate Capital Analysis
# of Highway Drones per

Bridges Bridge
United States 615,000 1:125 5,000

Asia-Pacific 2,500,000 1:125 20,000
Europe 600,000 1:125 5,000
MEA 300,000 1:125 2,500
RoW 1,250,000 1:125 10,000
Market Size
620 Progressive
$ 475
500 Base
Million
400
350 Conservative
300
60
2020 2025 2030

52
2.2 BEI: Property Inspection

Drones are already essential tools for processing insurance
claims.
Drones are transforming how building Travelers Insurance launched its drone
façade inspectors and insurance program in January 2017. By March
adjusters examine structures. 2019, 650 FAA-certified claim
Building façade inspectors currently professionals completed more than
rappel down the sides of buildings or 53,000 Travelers Insurance inspection
construct expensive scaffolding to flights across 48 states.13 In 2019, the
perform routine inspections on tall FAA granted State Farm the first
buildings every five years.12 Drones will national waiver to conduct drone
render scaffolding and rappelling operations over people and BVLOS for
unnecessary except for repair work. catastrophic assessments through
November 2022.14
Drones are already becoming standard
equipment for insurance claim As roof scanning and property damage
professionals. Insurance agencies have software grow increasingly advanced,
been deploying drones since 2015 to more insurance agencies will take to the
accelerate dangerous and time-intensive skies to improve worker safety and
inspections at claims sites while keeping inspection speed and accuracy.
employees safely on the ground.
Image from: State Farm; SenseFly eBee

53
2.2 BEI: Property Inspection

Property inspection forecast methodology
An estimated 430,000 building The conservative case assumes that
inspectors worldwide examine the nationwide approvals in the U.S. for
façades and structural components of façade inspection of tall buildings over
aging buildings in five-year intervals. people in urban environments will occur
Due to the danger of scaling buildings, after 2024.
we assume all 430,000 inspectors are in
the market for inspection drones. The progressive case assumes property
inspection by drones will become
Of an estimated 8.6 million insurance industry standard by 2030. It also
adjusters worldwide, only approximately predicts accelerated insurance company
255,000 property adjusters are assumed adoption as firms seek to take advantage
to be in the market for drones. of the efficiency gains from drones.
Estimates of the TAM for property inspection drones

Source: Bureau of Labor Statistics, Levitate Capital Analysis
# of Property
Region Drone to Adjustor Ratio TAM of Drones
Inspectors
United States 446,000 2:5 180,000

Asia-Pacific 4,700,000 7:50 650,000
Europe 820,000 4:25 130,000
MEA 630,000 7:50 88,000
RoW 2,460,000 3:25 300,000
Market Size
5.4 Progressive
$
4.2 Base
Billion
2
1.8 Conservative
1.3
0.2 0.8
2020 2025 2030
54
2.3 Agriculture
Corporate-sponsored precision agriculture is the
primary catalyst for drone adoption among farmers and
agronomists. IoT in agriculture is growing, but a “John
Deere-like” adoption of drones in the near term is
unlikely.
From monitoring crop health to picking Precision agriculture helps farms

fruit,1 drone use in agriculture is as improve efficiency through the use of
diverse as agricultural products technologies capable of rapid analysis of
themselves. data insights.
Of the many applications for drones in By 2025, more than 250,000 of the
agriculture, this report focuses on roughly 570 million farms2 in the world
applications related to precision will be using drones in some capacity.
agriculture. Large commercial farms Due to the costs of high-tech drone
with multimillion-dollar revenues are services, drone-based agriculture is
the primary users of precision likely to remain a premium service
agriculture in the Americas. through 2025, sowing further resistance
into the agricultural drone market.
Image from: LA Times

55
2.3 Agriculture
Large or heavily subsidized farms are among the primary users
of drone-based IoT.
While the Asia-Pacific region contains that drone technology could ultimately
the most farms and produces the most serve one-third of China’s farmland.
agricultural goods per year, a sizeable
portion of its farming operations is One caveat is that the agriculture
carried out by small farms.3 Asia-Pacific industry worldwide has historically
is also the fastest growing region for failed to grow into its total addressable
agricultural drones. market due to a lack of effective turnkey
solutions.
To afford high-tech drone services, these
small farms require substantial In the United States, the number of
government subsidies. In 2020, DJI sold farms and the total acreage of farmland
20,000 agricultural drones in China at a are declining, but the average farm size
unit price of up to $9,000, but most of has been increasing. The average
those sales were to state-run farming acreage of a U.S. farm now exceeds 440
companies.3 acres, the world's largest average. Of the
two million farms in the U.S., 50% earn
DJI’s drones were used to plant or spray less than $10,000 in sales, 80% earn
crops over an area totaling 270,000 less than $100,000 in sales, and only
square kilometers,4 and DJI estimates 8% earn $500,000 or more in sales.5
Image from: Taranis

56
2.3 Agriculture
Agrochemical companies sponsor drone services through crop
protection services.
Only farms with more than $100,000 in For context, North American farms
sales are expected to be in the market invest an estimated $300 per acre on
for drone operations. These farms farming equipment, which translates to
typically exceed 1,000 acres in size. For an annual equipment cost of $75 per
massive farms or multiple farms that acre.6
cover vast distances, general aviation
aircraft capture data more efficiently Even if individual farmers adopt drone
than drones. monitoring and spraying services, those
farmers may be ill-equipped to handle
The price per acre for drone services the terabytes of data gathered by flying
shrinks as acreage increases. At an sensors. Consequently, large
average industry price of roughly $5-8 agrochemical and crop management
per acre for high-resolution surveying, companies are the primary sponsors of
drone services are within the budget of their clients' drone services. These
most large farms and agronomy service companies use drone IoT data and
providers. connectivity to add technology services
to their sales of farm products.
Image from: Pyka

57
2.3 Agriculture
Drone-gathered data informs R&D efforts.
Agricultural drones primarily perform with their core products to empower

soil and crop monitoring, irrigation and their sales teams, validate their
spraying, and health assessment. products’ efficacy, and inform farmers of
when to plant, treat, and harvest crops
Agrochemical companies package to achieve the best yield.
insights from powerful data analytics
Tools for collecting farm data:
Satellite
• Lowest resolution
• Most expensive
Drone • Largest coverage area
• Best for multiple farms
• Highest resolution
• Least expensive
Plane
• Smallest coverage area
• Best for small farms • High resolution
• Middle range price
• Large coverage area
• Best for large farms
58
2.3 Agriculture
Soil and crop monitoring
Satellites, general aviation aircraft, and drones can all perform soil and crop monitoring
and analysis. High-resolution aerial images can produce 3D maps for crop and soil
analysis to design seed planting patterns, manage irrigation and nitrogen-levels, and
monitor crop development over a season.
Satellites can gather data on a massive scale. However, high-resolution satellite imagery
is expensive and limited by revisit periods, a resolution of 20-50 cm/pixel, and
vulnerability to weather conditions. General aviation aircraft are less expensive than
satellites and can cover more area than drones, making them better suited to surveying
large fields. However, planes produce lower resolution imagery than drones.
59
2.3 Agriculture
Irrigation and crop spraying
Drones equipped with multispectral or thermal sensors can identify dry or ailing parts
of a field. If spraying systems are onboard, drones can apply a precise amount of water
or agrichemicals to a targeted location. Targeted spraying costs from $10 to $50 per
acre, reduces the amount of excess chemicals percolating into groundwater, and
ultimately results in more efficient use of resources.
Health assessments
High-resolution images of fields can reveal bacterial infections and diseases or pest
invasions on crops. Early detection and mitigation can enable farmers to apply remedies
more precisely and better document crop losses for insurance purposes.
60
2.3 Agriculture
Agriculture forecast methodology
Our forecast primarily addresses large in the rest of the world are in the market
farms with annual revenues of more for drone products and services. Of the
than $100,000 per year and farms using drone-based agriculture, we
“technology-subsidized” farms. Of the estimated a drone-to-farm ratio based
570 million farms worldwide, 16% of on the average farm size in the region
U.S. farms, 10% of Asia-Pacific farms, and the amount of acreage a drone can
6% of European farms, and 6% of farms cover in a day.
Estimates of the TAM for farms that will use drones

7
Source: US Farm Data, FAO , Levitate Capital Analysis
Average Size Farms in Market

Region # of Farms
(acres) for Drones
United States 2,000,000 440 20%
Asia-Pacific 422,000,000 3 0.05%
Europe 10,500,000 40 5%
MEA 7,000,000 6 5%
RoW 128,500,000 15 1%
Total 570,000,000 0.5%
Market Size
5 Progressive
$
Billion 4 Base
2
1.8 2 Conservative
0.3 1
2020 2025 2030
61
2.3 Agriculture
Agriculture forecast methodology
Drone-based precision agriculture will high-revenue farms will adopt drones in

likely continue to be provided as a the near term.
managed service offered to farmers as
part of package deals with seed and crop The progressive case assumes drone-
protection companies. Today, these based services become embedded IoT
services cost an average of $5 per acre offerings as part of standard seed and
per season, with prices varying slightly crop protection packages from large
with total acreage. agrochemical companies. The
progressive case also assumes farming
The conservative case assumes that subsidies for drone services will increase
precision agriculture subsidies will be as governments seek to maintain
stunted as government agencies grapple adequate food supply for their growing
with reduced tax revenues and that only populations.
Estimates of the TAM for agriculture drones
# of Farms in Drone to Farm

Market Ratio
United States 400,000 1:4 100,000
Asia-Pacific 211,000 1:15 14,000
Europe 525,000 1:20 26,250
MEA 350,000 1:20 17,500
RoW 1,285,000 1:10 128,500
Image from: Wageningen University

62
2.4 Enterprise Counter Drone

As more consumer, enterprise, and delivery drones
populate the skies, drone detection and mitigation will
become increasingly important. Defense spending will
drive the counter-drone market until uniform counter-
drone standards are developed.
While hundreds of counter-drone industry standards. The growing
products are on the market, many are number of consumer and enterprise
unreliable outside of controlled drones in U.S. skies means it is only a
conditions. The absence of uniform matter of time before regulations are
standards raises safety concerns for air passed.
and ground traffic. Clear rules around
civilian counter-drone system use in the In the United States, only the U.S.
United States and many regions Department of Defense (DoD), DHS,
worldwide still do not exist. Department of Energy (DoE),
Department of Justice (DoJ), and U.S.
However, the FAA and the Department Coast Guard are authorized to interdict
of Homeland Security (DHS) are hostile or unauthorized drones to
conducting testing and analysis of protect critical infrastructure and
commercial counter uncrewed aircraft designated high-profile events and mass
systems (CUAS) in order to develop gatherings.1
Image from: Dedrone

63

Current CUAS restrictions leave critical infrastructure and
venues vulnerable to malicious drones.
Critical infrastructure, government Communications Commission (FCC),
buildings, and mass-gathering venues and federal aviation laws. In response,
are currently soft targets for malicious organizations such as the NFL are
drones. educating fans about drone restrictions
and urging Congress to extend CUAS
The FAA has warned local authorities authority to state and local law
and event organizers that unauthorized enforcement in order to impose
use of CUAS systems to protect high- temporary flight restrictions over large
profile events may violate FAA, Federal sporting events.
Authorized U.S. DHS units take the following actions to protect assets from
unlawful drone activity.
Source: Department of Homeland Security
Detect
Identify and track
the drone Warn
Inform the operator
of the violation Disrupt
Interrupt or exercise
control of the drone
Seize
Confiscate the drone
Destroy
Use reasonable
force to damage the
drone
64

CUAS interdiction faces regulatory challenges in the commercial
market.
When implemented, commercial-sector
CUAS solutions will follow the multi- Consequently, only soft-kill solutions,
sensor strategy of military installations such as detection, monitoring, and
and employ multiple detection drone commandeering, are widely
technologies that work in concert. A available on the commercial market.
layered defense response will provide
better protection against combat threats If directed-energy weapons are ever
like “dark drones,” which can evade RF approved for use in urban
detection and jamming. environments, they will likely be
restricted to federal agency use and use
Interdiction in cases of extreme emergency.
Military-grade jammers and powerful
electromagnetic countermeasures are The primary civilian use cases for CUAS
prohibited from civilian use in many technology will be to secure airports,
regions. Moreover, hard-kill solutions, combat drug and contraband trafficking,
such as projectiles, kinetics, lasers, and and protect enterprise and municipal
magnetics, introduce the risk of collateral airspace.
damage to the surrounding area and
safety risks to personnel on the ground.
Image from: Dedrone

65
Airports
U.S. airports currently lack the legal authority to deploy counter-drone technologies due
to the potential risk to crewed aircraft and air traffic control equipment. The primary
airport customers of CUAS technology have been in Europe, mainly due to high-profile
2
slowdowns after drone sightings. If the U.S. adopts CUAS policies similar to those in
the United Kingdom, the more than 5,000 public airports in the U.S. will become an
immense opportunity for CUAS solutions.
Protected enterprise airspace
As drone missions become increasingly commonplace in the skies, demand for securing
and controlling airspace around sensitive enterprises will increase. Many businesses use
geofencing, a service that triggers a notification when a mobile device or RFID tag enters
or exits a virtual geographical boundary to prohibit pilots from unknowingly intruding
into their airspace. Many major open-air stadiums, theme parks, and seaports will
eventually be in the market for more sophisticated drone detection technology.
66
Anti-trafficking
3 4
From the Malaysia and Singapore to the United States and Mexico, criminals are using
drones to traffic drugs and other contraband across borders. Across the United States,
drones are also used to smuggle contraband into prisons, resulting in a slight uptick of
5
prisons adopting counter-drone technology. The Federal Bureau of Prisons is
concerned that drones will be used to surveil institutions, facilitate escape attempts, or
transport explosives.
To date, Congress allocated $5.2 million to the Bureau of Prisons to purchase drone
detection and mitigation systems. Due to notoriously tight budgets at correctional
agencies, prisons are unlikely to adopt counter-drone technology preemptively. Agencies
will instead wait for drone-related incidents to occur in order to justify allocating a
portion of discretionary budgets to counter-drone solutions.
67
Protected municipal airspace
CUAS technologies will play a large role in uncrewed aircraft traffic management
ecosystems. In the medium term, partnerships between metropolitan areas and CUAS
sensor providers will be established to strategically install, operate, and maintain
proprietary sensor infrastructure around cities. These sensors will detect, monitor, and
manage drones within a city’s airspace. Citywide airspace monitoring and data service
will also help federal and local law enforcement protect soft targets and crowded spaces
from rogue drones in urban environments.
This scalable data-as-a-service model will likely come at minuscule costs to cities as
companies race to build their networks and compete for valuable tower and rooftop real
estate for sensors and lucrative airspace coverage.
68

Enterprise CUAS forecast methodology
As mentioned, the primary end users of We anticipate that all of the roughly 151
counter-drone solutions in the civilian nuclear power plants around the globe
market are airports, nuclear power are in the market for CUAS technology.
plants, prisons, and public and private The conservative case assumes that
soft targets. CUAS technology remains restricted to
federal use in the U.S. and most other
Although airports of all sizes are in the regions through 2025.
market for CUAS technology, our
forecast assumes only medium to large The progressive case assumes industry
airports with more than three million standards expand CUAS in the U.S.
passengers each year will use the market in 2021 and inspire frameworks
technology. for other international markets.
Civilian CUAS hardware and annual subscription costs

Subscription
Civilian Customer Hardware Cost ($)
Cost ($)
Airports $800,000 $270,000
Nuclear Power Plant $200,000 $70,000
Prisons $75,000 $15,000
Oil & Gas $75,000 $25,000
Enterprise Airspace $75,000 $20,000
Municipal Airspace $5,000,000 $1,700,000
Market Size
3 Progressive
$
Billion 1.7 Base
1.4
0.9
0.4
2020 2025 2030
69
2.5 Oil & Gas

Drones are improving worker safety in the oil and gas
industry while reducing inspection and maintenance
costs. Despite the 2020 oil and gas market crash, the
industry is among those with the highest potential in the
drone economy.
Drones are used in the oil and gas In Nigeria, where up to 7% of daily crude
industry to inspect refineries, pipelines, production is stolen, drones are also
and onshore and offshore platforms. deployed to monitor ships and pipelines
In the long term, drone-based oil and to curb rampant oil theft.1
gas inspection will become part of the
broader $100 billion oil and gas services Continued innovations in drone
market as firms gradually outsource autonomy allow faster and more
activities that can be performed more frequent inspections that facilitate
economically as managed services. preventive maintenance and minimize
Consequently, software and services will downtime of critical infrastructure. This
represent an increasing amount of report examines the oil and gas market
drone-based oil and gas revenues. across upstream, midstream, and
downstream segments.
Image from: Ericsson; DJI Inspire

70
2.5 Oil & Gas

Drones are deployed upstream to improve efficiency, safety, and
compliance.
Upstream oil and gas operations use gas, uses surveillance drones daily
drones to monitor onshore and offshore across their global portfolio. The
assets for safety and regulatory company plans to expand its BVLOS
compliance. These monitoring activities monitoring operations to more than 500
include vegetation encroachment locations in the West Texas Permian
detection, spill detection, gas emissions Basin in partnership with Avitas, a
tracking, and flare stack inspection. Baker Hughes venture.2
Drones operating upstream can also
play an essential role during emergency Avitas AeroVironment Vapor Series
response scenarios, such as industrial drones are equipped with an optical gas
accidents and natural disasters. Real- imaging camera and laser-based systems
time imagery and video analytics can used to detect methane leaks more
map out oil spills and fires to help accurately. The drones will help Shell
decision-makers deploy resources reduce their North American emissions
effectively and keep personnel safe. to below 0.2% of their produced natural
gas volumes by 2025.3
Royal Dutch Shell, one of the earliest
adopters of drone technology in oil and
Image from: Avitas Systems

71
2.5 Oil & Gas

Drones perform a wide range of inspection tasks on offshore
platforms.
Drones can deliver critical supplies to The drone delivered a small 3D-printed
remote oil and gas operations. In August part for the platform’s lifeboat system.
of 2020, Equinor and Nordic Unmanned However, by the end of the decade
used a Camcopter S-100 drone to larger, heavy-lift, middle-mile logistics
perform the world’s first offshore drone drones like Elroy Air’s Chaparral will
delivery from Mongstad, Norway, to perform routine and autonomous
their North Sea-based Troll A platform deliveries of replacement parts and
100 km away.4 critical supplies to remote operations
and offshore platforms.
High-definition
structural inspection of Visual and thermal
pedestal crane, drilling inspection of boom and
derrick, and other hard- flare tip to better plan
to-access areas after for replacement and
severe weather events maintenance
Thermographic Inspection of riser and

imaging inspection installation jackets to
of splash areas to limit dangerous rope
examine hard-to- access
detect corrosion
72
2.5 Oil & Gas

Midstream pipelines represent the largest addressable market
for oil and gas drones.
BVLOS approvals will allow autonomous construction violations that threaten

drones to inspect hundreds of miles of pipeline safety.
pipelines more economically than
helicopters. Due to the vast networks of In the near term, drones equipped with
oil and gas pipelines in the U.S. and ultrasonic and thermal imaging sensors
worldwide, the midstream segment will will perform close-range, nondestructive
eventually become the largest market for inspections of exposed pipelines, above-
drones within the oil and gas industry. ground storage tanks, and marine
vessels. The vast amount of data
While most pipelines are underground, collected will allow operators to predict
aerial inspection is still the most the health of critical equipment and
effective way to detect above-ground forecast potential malfunctions.
anomalies or disturbances over the
length of buried pipeline. These In the long term, drones-in-a-box,
anomalies include weather-induced strategically distributed along
changes to topography that expose significant pipelines, will enable remote
buried pipes, discolored or dying and on-demand inspection and
vegetation that can indicate a leak, surveillance missions of long-distance
encroaching trees with underground oil and gas assets.
roots that could damage pipelines, and
Image from: Royal Dutch Shell

73
2.5 Oil & Gas

Downstream oil and gas operations are the smallest total
addressable market for drones.
To support downstream operations, However, the approximately 700

drones provide fixed-site security refineries worldwide pose less of an
monitoring and inspect external inspection challenge due to ease of
pipelines and internal wall thickness of accessibility than midstream and
storage tanks. Plant operators gain the upstream assets. As a result,
largest benefit from drone use when downstream oil and gas operations will
drones are able to perform inspections be the smallest market for drones in the
while plants remain open. oil and gas industry.
Inspection of fluid
catalytic cracking and
coker units
Inspection inside of
chimneys to detect
Inspection of storage
cracks and anomalies
tanks for corrosion and
leaks
74
2.5 Oil & Gas

Oil and gas forecast methodology
Our analysis estimates the total bust cycles, we conservatively modeled
addressable market for inspecting this historically low count as constant to
upstream land and offshore oil rigs account for the ongoing and irreversible
based on the September 2020 Baker shift toward renewable energy sources.
Hughes Rig Count.6 The total addressable market for
upstream drones is estimated to be 1:10
This count is lower than in previous for land rigs and 5:1 for each offshore
years due to the oversupplied market for platform based on the number of
oil products in 2020. Although the oil inspections a specialized drone can
and gas industry is subject to boom-and- perform per day.
Estimates of the TAM for upstream oil and gas drones

Source: Baker Hughes, Levitate Capital Analysis
TAM of
Region # of land rigs # of offshore rigs
upstream drones
United States 247 14 100
Asia-Pacific 101 68 350
Europe 82 57 300
MEA 289 48 270
RoW 122 32 180
Market Size
$ 2.2 Progressive
Billion 1.6 1.8 Base
0.7
0.2
2020 2025 2030

75
2.5 Oil & Gas

Oil and gas forecast methodology
For midstream operations, our analysis The conservative case assumes that the
assumes drones will inspect half of all strained balance sheets in the oil and gas
trunk pipelines worldwide. We assumed sector will restrict drone adoption to
a drone can inspect an average of 100 large integrated operators and service
kilometers of pipelines per day to providers.
calculate the total addressable market
for midstream drones for each region. The progressive case assumes that oil
With roughly 700 oil and gas refineries and gas companies will come to grips
around the globe, the total addressable with the permanence of lower operating
market is estimated to be four drones margins and accelerate drone adoption
per refinery based on the number of to cut operating costs.
inspections a specialized drone can
perform at a refinery per day.
Estimates of the TAM for midstream oil and gas drones

7
Source: Offshore Technology , Levitate Capital Analysis
Region km of trunk pipelines TAM of pipeline drones
United States 835,000 4,200

Asia-Pacific 350,000 2,000
Europe 425,000 2,200
MEA 220,000 1,100
RoW 210,000 1,050
Image from: FLIR; FLIR MUVE C360

76
2.6 Real Estate

Drones are already widely used in real estate. Real estate
will remain a competitive drone services market.
Due to improved autonomy and easy-to- The skills and time required to compile
use interfaces, the real estate industry and edit captured aerial images will
regularly uses drones to showcase and continue to drive the outsourcing of data
market properties. Today, 64% of U.S. storage, editing, and processing to
realtors work at brokerage firms that service providers in the real estate
either already use drones or plan to use market.
drones in the future.
Drones have a 64% mindshare among Realtors in the U.S.

1
Source: National Association of Realtors
Hire a drone professional 29%
Someone in office uses drones 16%
Personally use drones 5%
Don’t currently but plan to 14%
Do not use drones 24%
Don’t know 12%
Image from: Robert Bye, Unsplash

77
2.6 Real Estate

Aerial photography can help real estate agents sell homes faster.
Photography plays a critical role in real Aerial images appeal to prospective

estate marketing. Homes with aerial buyers’ emotions by illustrating
images sell 68% faster than homes that proximity to roads, nearby amenities,
do not use aerial images. Moreover, and landmarks. Aerial images are also
homeowners are more likely to list with increasingly expected for high-end and
a real estate agent who uses video for expansive properties, especially when an
marketing their home.2 above-ground view enables prospective
buyers to fully appreciate the scale of
those properties.
$5,000
$20,000
Realtors spend an average of
$5,000 annually on marketing
1 in 8 Realtors spend more than

3
$20,000 annually on marketing
$800+
- Professional production
Price of drone services per listing
- Videos with editing
- Still aerial photos
$100
78
2.6 Real Estate

Growing suburban populations and demand for virtual tours are
fueling drone real estate services.
The 4K cameras on prosumer drones market in the United States, combined
have enough resolution to capture the with the suburban sprawl of many U.S.
high-quality videos and images used in cities, means the United States will
real estate. The typical acquisition and remain the largest market for drones in
operation costs for agents who use real estate for the foreseeable future.
drones are $800 for a drone and $1,200
per year in software and services. The increasing number of remote
viewings during COVID-19 has
The Asia-Pacific real estate market is the accelerated the adoption of new
largest globally; however, most real technologies to capture images and
estate drones are in regions with large videos for virtual tours. The rapid
suburban populations, such as Australia, growth in real estate drone operations
Canada, and the United States. The large during COVID-19 will continue into
commercial and residential real estate 2021 and beyond.
Market Size
1.6 Progressive
$
Billion
1.2 Base
0.8

0.1 0.3
2020 2025 2030
79
2.6 Real Estate

Real estate forecast methodology
Roughly 14% of realtors are in the near- per hour for two-hour sessions at least
term market for drones. The total once per month. We also estimate that
addressable market in the U.S. is 75% of real estate drone users will use
estimated to be 280,000 drones for the data management and processing
two million real estate agents in the U.S. services at $100 per month per drone.
These numbers translate to about 2.6
drones for each of the 106,000 The market for real estate drones is
brokerage firms in the United States.4 maturing, but the conservative case
Applying a similar analysis to the other assumes the market is fully mature and
four regions results in the total that increased competition among gig-
addressable market for drones for each economy pilots will continue to drive
region. down aerial photography prices.
The average price for a real estate drone The progressive case assumes continued
reflects a prosumer price of $800. An growth of single-family home
estimated 30% of real estate agents will construction and urban flight will drive
continue to hire professional drones as a greater demand for suburban residential
service at an industry average of $100 and commercial aerial drone services.
Estimates of the TAM for real estate drones

Real Estate
Region Drone to Agent Ratio TAM of Drones
Agents
United States 2,000,000 14:100 280,000
Asia-Pacific 3,000,000 7:100 210,000
Europe 500,000 14:100 70,000
MEA 100,000 14:100 14,000
RoW 650,000 14:100 91,000

80
2.7 Utilities
The difficulty of inspecting the growing numbers of
towers, powerlines, and wind turbines creates prime
opportunities for drones to prove their value.
Drones are transforming the way and company-specific functions
inspection and maintenance personnel internally. Inspection drones are
do their jobs at utility companies. Utility deployed within utilities in three
companies are distributing highly primary areas: cell/radio towers, power
customizable drone technology to transmission lines, and wind turbines.
everyone from surveyors and
environmentalists to line crew and Of the more than 4.8 million
tower climbers. communications towers in the world,
250,000 are in the United States.1 With
As drone programs graduate out of pilot the ongoing buildout of 5G networks,
and experimental phases, utilities will AT&T alone will need 300,000 new cell
outsource routine tasks (50% of drone towers in the United States to provide
operations) to inspection service nationwide coverage over the much
providers and retain only specialized shorter 5G range.2
Market Size
$ 2 Progressive
Billion
1.4 Base
0.9
0.1 0.4
2020 2025 2030

81
2.7 Utilities: Tower Inspection

Drones will help alleviate the maintenance burden of thousands
of new 5G towers.
Although these new 5G towers will not inspections to occur from the ground. In
be as tall as current cell phone towers, such cases, climbers need to scale towers
routine inspection of each tower every only to perform repairs, increasing
one to three years will require a leap safety and efficiency. Remote
forward in productivity.3 technicians can perform more in-depth
inspections by analyzing drone-gathered
Tower inspection by drone requires images with photogrammetry software
proximity flights around each tower. For that creates digital models of the towers.
new 5G towers in the U.S., these flights Technicians can also feed the images
occur within line of sight of an operator into analytics software to perform
and lower than 400 feet above ground corrosion and other anomaly detection.
level, so they meet Part-107 regulatory Upon widespread regulatory approval of
requirements. BVLOS operations, strategically
positioned drones-in-a-box will
Autonomous drones equipped with remotely deploy to perform tower
high-resolution optical and thermal inspections on demand.
imaging cameras are enabling many
82
2.7 Utilities: Tower Inspection

Tower inspection forecast methodology
Roughly 560,000 tower inspectors work The conservative case assumes that
on the nearly 5 million communications training, certification, and compliance
towers worldwide, with thousands of requirements will cause friction among
new installations coming online each tower inspectors and slow market
year as nations race to build out 5G growth. The progressive case assumes
infrastructure. Our base case analysis drones will become so instrumental to
estimates an average of one drone per tower inspections by 2025 that every
four-person team in the U.S. and Europe tower inspector in developed markets
and slightly larger ratios in the other will have a drone as essential
regions. equipment.
Estimates of TAM for tower inspection drones

Source: Bureau of Labor Statistics, Levitate Capital Analysis
Drone to Saturation # of
Region Tower Climbers
Climber Ratio Drones
United States 29,000 1:4 7,250
Asia-Pacific 300,000 1:12 33,000
Europe 48,000 1:4 12,000
MEA 28,000 1:6 4,640
RoW 58,000 1:6 10,000
Market Size
1 Progressive
$
Billion
0.6 Base
0.3
0.3 Conservative
0.2
<0.1 0.1
2020 2025 2030
83
2.7 Utilities: Power Transmission

Drones are essential tools for reducing power transmission
liabilities and inspection costs.
In response to the more than 1,500 fires degraded transmission infrastructure
caused by PG&E over the past six years,4 before an outage occurs or a fire starts.
utility companies worldwide have made PG&E has increased its use of drones
power transmission maintenance a top and helicopters in areas considered to be
priority. at extreme or elevated risk of wildfires in
order to inspect more than 15,000 miles
Drones are used by power utilities to of electrical lines in California by the
check for vegetation growth around end of 2020.5
power lines and detect damaged or
Drone Inspection Helicopter Inspection

Cost per mile: $200-$300 Cost per mile: $1,200-$1,600
84

Utilities see the most savings from deploying drones to inspect
power generation assets.
Drones equipped with thermal and UV Powerline inspection is an obvious
cameras can detect overheated application for drones, but utilities
connectors, corona discharge, and other realize the most savings by using drones
failures, enabling crews to perform to inspect power generation assets (e.g.,
efficient and timely maintenance. boilers, smokestacks, and flare stacks).
Drones also capture high-resolution Drones can quickly identify faulty
photos of distribution and transmission equipment with minimum downtime, no
equipment. Computer vision classifies scaffolding, and no need to put humans
the equipment, and machine learning at risk.
identifies subtle changes and anomalies.
Most power utility drone inspections
While piloting drones around high- proactively look for issues that can
voltage powerlines is less risky than result in a fire or an imminent outage.
piloting helicopters, it’s still not without U.S. utilities using drones have an
considerable risks. As a result, many average of 10 in their fleet – many of
power utility companies are seeking them DJI models. Currently, their pilot
drones with a high level of flight programs lack the necessary personnel
autonomy. and equipment to transition into
proactive maintenance.
Image from: Lancaster Online

85

Transmission line inspection drones require electromagnetic
shielding.
Line inspectors must use high-end, Power utility forecast
specialized drones because high-voltage methodology
powerlines can exert electromagnetic
interference on equipment that lacks Our base case analysis assumes that
ferromagnetic shielding. drones will inspect approximately 1.1
million miles of high-voltage
Drone adoption in power transmission transmission lines. High-voltage
inspection is hindered by pilot training powerlines are routinely inspected every
requirements and restrictions on BVLOS one to two years and undergo detailed
flights. In the long term, utilities cannot inspections every three to five years.
achieve significant cost savings if an Drones can complete approximately 50
operator must remain within line of miles of inspections per day, and we
sight of the drone. As with tower anticipate at least five drones per
inspections, improved drone autonomy inspection team of surveyors,
and BVLOS approvals in the near term environmentalists, and line crew.
will allow strategically distributed Therefore, we estimate a total
drones-in-a-box to perform on-demand, addressable market of more than
remote powerline inspections. 20,000 drones in the U.S. and 91,000
drones worldwide.
Image from: Percepto, Boston Dynamics

86

Power transmission forecast methodology
The almost 3,000 power utilities in the Heavily regulated utilities may take
U.S.6 translate to an average of just longer to expand existing drone
under seven drones per power utility program budgets. Others may simply
and roughly one drone for every 5 of the wait for more BVLOS approvals and
112,000 electrical power line crew in the turnkey drone solutions.
U.S.7
The progressive case assumes the need
Although drones have proven to be cost- to examine aging infrastructure, coupled
effective tools for maintaining with improving technology and
distributed infrastructure and reducing consistent cost savings, will accelerate
liabilities, the conservative case assumes the shift of power utility drone programs
a continued slow-moving bureaucratic from discretionary budgets into
process that has historically constrained operational line items.
power utility adoption of drones.
Estimates of TAM for power transmission inspection drones

Region Miles of Powerlines TAM of Drones
United States 200,000 20,000

Asia-Pacific 400,000 32,000
Europe 165,000 16,500
MEA 50,000 5,000
RoW 300,000 18,000
Market Size
$ 0.8 Progressive
Billion
0.6 Base
0.5
0.4 Conservative
0.4
0.1 0.2
2020 2025 2030

87
2.7 Utilities: Wind Turbines

Wind turbine inspection drones face direct competition from
ground-based solutions.
The global energy industry spends more Wind turbines require preventive
than $8 billion annually on wind-farm maintenance checkups roughly three
maintenance. Total maintenance times per year.9 Although integrated
spending increases each year with the computers periodically perform self-
installation of new wind turbines. diagnostic tests, most wind turbine
Around 20% of total maintenance costs technicians still manually inspect the
are operational, including incidents of blades for signs of wear and other
gearbox failure at a cost of $300,000- irregularities.
500,000 per failure.8
Ground-based camera
Drone • Daily inspections: 3-6 turbines
• Cost: $300-$500 per turbine
• Daily inspections: 10-15 turbines • Pro: Simple and easy to use
• Cost (piloted): $300-$900 per • Con: Must reposition blades and
turbine camera
• Pro: Thorough inspection
• Con: Can’t fly in heavy winds
Manual (traditional)
• Daily inspections: 2-5 turbines
• Cost: $1,500-$2,000 per turbine
• Pro: Standard procedure
• Con: Slow, expensive, and
dangerous
88

Drone-based turbine inspections are faster and more thorough
than other methods.
Today, drones are performing close, checkup will also allow operators to
360-degree inspections and gathering minimize the impact of offline turbines.
data in weeks. Manual inspections can
take months. Drones also transport tools Wind speeds can surpass 20 m/s (45
and equipment from the ground or from mph), so drone operators are using
boats to repair crews at the top of large, industrial-sized drones with high
turbines. wind resistance and shielding from
magnetic interference. Moreover, drone
In the near term, routine deployment of operators check for safe weather
drones equipped with high-resolution conditions before launching each
photography, infrared cameras, and mission.
light detection and ranging (LiDAR) will
autonomously inspect wind turbines for In the long term, fleets of drones-in-a-
cracks, erosion, and other flaws before box will perform scheduled or on-
problems become more urgent and demand remote monitoring at onshore
costly to repair. This type of preventive and offshore wind farms.
Image from: FlightWave

89

Wind turbine inspection forecast methodology
There are more than 400,000 wind
turbines worldwide, with thousands of Some wind farm environments may
new installations coming online each exceed the windspeed limits of drones.
year. Each installation undergoes Therefore, the conservative case
preventive maintenance checkups two to assumes only half of the installations
three times per year. will be in the market for drones.
We estimate that automated drones can The progressive case assumes continued
perform routine inspections of up to 20 drone improvements will make turbine
turbines per day. We thus calculated a inspection drones standard equipment
total addressable market of on all wind farms.
approximately 21,000 drones for wind
turbine inspections.
Estimates of TAM for wind turbine inspection drones

# of Wind Drones per Saturation # of

Region
Turbines Turbine Drones
United States 60,000 1:20 3,000
Asia-Pacific 160,000 1:20 8,000
Europe 115,000 1:20 5,750
MEA 2,000 1:20 100
RoW 80,000 1:20 4,000
Market Size
235 Progressive
$
Million 200 Base
150
120 115 Conservative
10 65
2020 2025 2030

90
2.8 Mining
Drones are becoming standard equipment at large mines
and quarries; however, the total market is limited by the
number of mines in operation.
Roughly 13,000 coal and non-fuel Drones are currently guiding
mineral underground and surface mines operational decision making at mines by
are in the United States.1 With an mapping out deep mines, monitoring
estimated 15,000 mines and quarries in productivity, and measuring stockpiles.
Asia-Pacific, 500 in Europe,2 10,000 in
the Middle East and Africa, and 7,500 in More recently, routine volumetric
the rest of the world, the total number of measurements have helped mine
mines and quarries worldwide is roughly operators monitor inventory, prevent
46,000. theft, and plan deliveries and
collections. Extremely large mines use
The three primary tasks drones perform fixed-wing surveying drones to
at mines are surveying and mapping, determine where resources and reserves
stockpile management, and road can be deployed and improve the
haulage optimization. productivity of exploration investments.
Image from: Exyn Technologies

91
2.8 Mining
Automatic surveying and mapping

Drones capture high-quality orthoimages spanning entire mining operations faster and
more economically than any other method. Mine operators maximize profits by using
detailed aerial photography to identify dense pockets of valuable elements and minerals
before digging. Drones are also used to perform autonomous underground surveys in
areas that are too deep and dangerous for humans to enter.
Stockpile management
Mining operations output stockpiles that span vast areas and grow to great heights.
Terrain models of inventory levels allow companies to track stockpile changes and
movements and reliably validate financial statements and subcontractor transactions.
92
2.8 Mining
Road haulage optimization

Drones monitor mining haulage road conditions and provide aerial data that allow
engineers to plan, design, and perform construction and maintenance activities. Mining
giant BHP employs drones to inspect cranes, towers, and flare stacks, dangerous tasks
3
that humans no longer have to perform.
Image from: Wingtra

93
2.8 Mining
Mining forecast methodology
Our analysis estimates that the total primarily to survey massive mines at a
addressable market for mining drones is unit cost of $30,000 and rotary drones
one drone for every mine. The mining being used for detailed in-mine
industry is one of the earliest adopters of inspections at a cost of between $5,000-
drone technology, and our base case $10,000 per unit. Drones are already
assumes drone use will continue to grow commonplace in mining operations, and
by 20% up until reaching the total the conservative case assumes adoption
addressable market. frictions will cut the growth rate in half.
Both fixed-wing and rotary drones are The progressive case assumes drone
suitable for mining inspection and surveying and underground mapping
surveying. We anticipate a 50/50 split, will become industry standard by 2030.
with fixed-wing drones being used
Estimates of the TAM for mining drones

Source: National Mining Association, Levitate Capital Analysis
Drone to Mine Saturation # of

Region # of Active Mines
Ratio Drones
United States 13,000 1 13,000
Asia-Pacific 15,000 1 15,000
Europe 500 1 500
MEA 10,000 1 10,000
RoW 7,500 1 3,750
Market Size
1.3 Progressive
$
Billion 0.9 Base
0.6

0.1 0.2
2020 2025 2030
94
2.9 Videography: Journalism

Journalists use drones to capture news events from wide
angles and cover the aftermath of natural disasters.
Drone usage in the journalism industry directly relates
to the ease of instant flight approvals.
Drone use in the journalism industry Although consumer and enterprise-
has been common since CNN began grade drones do not have the
experimenting with “drone journalism” operational range of helicopters,
in 2014.1 Today, drones are storytelling multiple drones cost a fraction of one
tools that can help illustrate the impact helicopter's operating costs and can be
events have on communities and help deployed on demand.
reconstruct how incidents unfolded.
Drones equipped with high-quality The primary impediment to the
cameras enable reporters to cover news increased use of drone journalism has
events occurring in largely inaccessible been federal and local regulatory
areas. Besides enabling news restrictions on when and where drones
organizations to film in hard-to-access fly.
locations, drone journalism also reduces
expenses.
Image from: Dominic Sansotta, Unsplash

95

Instant flight approvals have accelerated drone-based
journalism.
Instant-waiver approval programs like The approval process to deploy drones
the Low Altitude Authorization and on demand will become easier as
Notification Capability Program regulatory frameworks become clearer
(LAANC), introduced in 2018, have worldwide. As a result, professional and
given journalists more freedom to use freelancer journalists will continue to
drones to cover breaking news in expand their use of drones, and
controlled airspace in the United prosumer drones will become standard
States.2 equipment onboard television
production trucks.
Drone
Purchase price: $1,800-$4,000
Cost per hour: $8-$20
3
News Helicopter
Purchase price: $500-$850K
Cost per hour: $400-$500
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Journalism forecast methodology
Our forecast anticipates that all major journalism is the sum of the market for
TV news agencies worldwide will major news bureaus and freelancers.
become heavy users of drones over the Journalism drones are overwhelmingly
next decade. Each primary news agency prosumer and enthusiast grade and are
has syndicates of bureaus in major cities typically acquired from consumer retail
that cover regional news. More than channels.
2,100 television production trucks and
vans in the U.S. serve more than 50 Drone journalism is in the late-majority
news bureaus. We estimate the total phase of technology adoption. The
addressable market for drones among conservative case assumes that the
news agencies is one drone per vehicle. market growth rate will soon mature as
Freelance journalists are also heavy the laggards finally enter the market.
users of drones, and our analysis The progressive case assumes continued
estimates that more than half of market growth within the late-majority
freelance journalists in the U.S. and stage as more news agencies expand
slightly less than half in Europe and their fleets of drones capable of longer
MEA are in the market for drones. Our flight times and accelerate their
total addressable market for drone retirement of helicopter programs.
Market Size
250 Progressive
$
220 Base
170
Million 190 Conservative
150
135
40
2020 2025 2030

97
2.9 Videography: Cinematography

Hollywood has been using drones to capture aerial
footage for blockbuster films since 2012. As prices for
aerial videography come down, drones are becoming
increasingly commonplace equipment on set.
Before 2014, drone use in film and TV Software and services will make up more
production was strictly prohibited in the than 95% of total cinematography drone
United States. However, today film and revenues in the long term, and drone
TV production studios frequently use cinematography services will capture
drones to film, scout, and plan shoots.4 more than 1% of the $100 billion spent
Hollywood tends to outsource many globally5 on theatrical, home, and
elements of TV and film production. mobile entertainment production. The
Most cinematography drone operations primary impediment to more
are and will continue to be outsourced to cinematography drone use has been
service providers. federal and local regulatory restrictions
on when and where drones fly.
Image from: Wall Street Journal

98

Drones are less expensive than helicopters.
Drones are much better than cranes at Helicopters will continue to perform
capturing video from multiple angles. In tasks that require higher altitudes,
the near term, drones will adopt more of greater distances, and longer flight
the responsibilities of on-set cranes to times. Consequently, aerial film
hoist lights, mirrors, and special-effects production companies will continue to
devices. offer helicopters alongside drones in
their service catalogs.
Filming Helicopter
Pros:
Drone
Pros: • Long range and
endurance
• Versatile • Can transport crew and
• Budget friendly gear
Cons: Cons:
• Short flying times • Expensive
• Altitude constrained • Safety risks
99

Cinematography forecast methodology
Los Angeles, California, constitutes 40% shoot days for the other four regions was
of the film and TV production market in determined by multiplying the annual
the U.S. Los Angeles has a five-year ~318,000 total “shoot days” in the world
average of 38,000 total “shoot days” per by their respective market share film
year for movies, TV shows, commercials, production. Dividing this total by the
and other media.7 Accordingly, we average number of shoot days per film
estimate a total of 95,000 shoot days in provides an average number of films
the U.S. each year. The total number of produced in each region per year.
Estimates of TAM for Cinematography drones

Source: FilmLA, Levitate Capital Analysis
Region Annual “Shoot Days” Films per Year TAM of Drones
United States 95,000 900 900

Asia-Pacific 130,000 1,220 1220
Europe 48,000 450 450
MEA 26,000 250 250
RoW 19,000 180 180
Market Size
1.2 Progressive
$
1.1 Base
Billion 0.9 Conservative
0.6
0.5
0.4
<0.1
2020 2025 2030

100
2.9 Videography
Cinematography forecast methodology
To obtain the total addressable market slow restart after the COVID-19
for cinematography drones per region, pandemic, which will hamper the short-
our base case assumes that drones will term expansion of drone use on set. The
provide footage for half of these films progressive case assumes drones will be
produced and that each film that uses used to provide footage and special
drones will use an average of two effects for more films as production
drones. companies seek ways to save money
without sacrificing quality.
The conservative case assumes the film
production industry will experience a
Combined market size of professional videography drones

For context, Panasonic’s Media Entertainment business division, one of the world’s largest producers of professional
6
production and broadcasting cameras, generated almost $1.2 billion in sales in 2019.
Market Size
1.4 Progressive
1.3 Base
$
0.8 1 Conservative
Billion
0.6
0.5
<0.1
2020 2025 2030
Image from: The Blackdrone Gmbh

101
3 Consumer
Market Size
Year 2020 2025 2030
7.3 Progressive
$ 5.0
5.3 Base
Billion
4.2
3
Unit Shipments 13.2 Progressive
Million
8.5
9.6 Base
7.1
5 7.0 Conservative
6.0
102
3 Consumer
The significance of consumer drones within the drone
economy will decline as commercial applications take
off. We expect the consumer drone market to reach
maturity by 2025.
Most people who think about drones registrations in the United States has
picture consumer drones. However, the slowed as prices for popular drones have
defense and enterprise segments of the increased and early adopters have
drone economy are both larger than the become satisfied with existing
consumer drone segment. technology. In 2019, prices for popular
DJI drones in the U.S. increased by 13%
Growth in the “experience economy” after the country imposed new tariffs on
and demands for standout social media Chinese-made goods.1
content have led to widespread drone
use for aerial photography. However, Due to these factors, the FAA estimates
according to the Federal Aviation that the number of registered
Administration (FAA), growth in the recreational drones in the U.S. will reach
number of recreational drone saturation by 2024.2
Image from: DJI; DJI Mavic Air 2

103
3 Consumer
Drones must play a larger role in consumers’ lives for the market to
continue to grow.
While some recreational drone owners tablets are unlikely to eat into the
simply fly for fun, many drone owners mobile phone’s 90% (and increasing)
also take photographs and record videos share of photos taken.
during their flights. Consequently,
digital cameras – despite being a fully Just as manufacturers are rebranding
mature and declining market – offer a smartwatches from novelty timekeeping
reasonable benchmark for how the extensions of smartphones to
prosumer and enthusiast consumer indispensable health and wellness
drone market will mature. Of the 1.4 monitors, consumer drone
trillion photos taken in 2019, only ~8% manufacturers will need to reimagine
were taken by digital cameras,3 and the role drones play in consumers’ lives
drones captured less than 1% of total in order to earn mindshare of a broader
photos. Drones, digital cameras, and audience.
Million
FAA forecast of registered 1.6 1.49 1.54 1.57 1.59

1.42
recreation drones in the U.S. 1.47 1.48
1.38 1.42 1.45
1.32
Source: Federal Aviation Administration
4 1.2 1.38 1.39 1.39
1.36 1.37
0.8
0.4
0
2019 2020 2021 2022 2023 2024
Image from: Parrot; ANAFI

104
3 Consumer
Consumer drone shipments lagged behind shipments of other
discretionary consumer electronics in 2019.
Unit sales in the consumer drone market While our estimates include only
are difficult to ascertain because private rotorcraft drones above 0.25 kg (0.55
platform manufacturers do not release lb.), future sales of consumer drones are
official sales data. We estimate 5.7 unlikely to reach the levels of video
million consumer drone units were game consoles. Unlike other
shipped in 2019. For context, in the last discretionary consumer electronics,
fiscal year the bestselling action camera, consumer drones do not benefit from
the GoPro Hero series, sold more than network effects and face stringent usage
4.2 million units,5 and the bestselling restrictions.
video game console, the Nintendo
Switch, sold 21 million units.6
2019 discretionary consumer 2019 discretionary consumer electronics

electronics revenues unit sales
Source: Levitate Capital Analysis Source: Levitate Capital Analysis
Total Average
Revenues Revenue
2019 Unit Sales
In 2019 Per Unit
($B) ($)
Apple iPhone 142.3 738 Apple iPhone 193M
Smart Speakers 11.9 81 Smart Speakers 147M
Smartwatches 24.6 397 Smartwatches 62M
Digital Cameras 15.5 399 Digital Cameras 38.9M
Nintendo Switch 11.3 537 Nintendo Switch 21M
PlayStation 4 18.2 400 PlayStation 4 13.6M
Consumer Drones 3.5 615 Consumer Drones 5.7M
GoPro Hero
1.2 280 GoPro Hero Cameras 4.3M
Cameras
105
3 Consumer
Global consumer drone sales for 2020 will decline due to COVID-
19.
With lockdown containment measures, experienced an overall sales decline of
widespread brick-and-mortar store 54% in the second quarter of 2020
closures, and worldwide disruption of compared to last year.
manufacturing and supply chains, global
sales of consumer drones in 2020 are These percentage declines reflect the
likely to follow the trends of other worldwide shift from the experience
outdoor discretionary consumer economy of 2019 to the “homebody
electronics7 and contract by economy” of 2020, as many consumers
approximately 15% in the U.S. and have reduced their participation in
Europe and roughly 10% in the Asia- social-recreational activities until the
Pacific market. threat of the pandemic subsides.
Assuming the action camera market
According to the Camera and Imaging provides an accurate health assessment
Association, digital camera shipments of the broader experiential consumer
decreased 52% in the first six months of electronics industry, fourth quarter
2020 (compared to a 25% decrease in consumer drone sales will show a strong
2019).8 rebound through higher-margin digital
and direct-to-consumer channels.
Due to the pandemic, GoPro, which
dominates the action camera market,
Image from: DJI; DJI Mavic 2

106
3 Consumer
DJI’s dominance in consumer drones is unlikely to change in the
near future.
DJI, based in Shenzhen, China, has built
a hardware empire that controls more In response to the new legislation and
than 70% of the global consumer and concerns over potential DJI drone
enterprise drone market by combining security vulnerabilities,10 U.S.
low-cost hardware with value-added government agencies and enterprises
software that appeals to consumers, have either had to obtain waivers to fly
professionals, and businesses. DJI drones or ground their DJI fleets
entirely while they evaluate domestically
DJI’s design and build model, rapid manufactured alternatives.
pace from ideation to creation, and low
labor and manufacturing costs make The combination of the pandemic and
competing against it difficult without a geopolitical pressures has led DJI to
leap forward in technological superiority reduce its corporate sales and marketing
and a tailwind of economic nationalism. teams in 2020.11 Despite federal
In the United States, economic restrictions, security concerns, and staff
nationalism in the drone industry has layoffs, DJI will likely maintain a
come in the form of new legislation, the dominant market share worldwide
American Drone Security Act of 2019, among value-conscious consumers for
which bans the use of federal funds to the foreseeable future.
purchase drones manufactured in
China.9
Image from: DJI; DJI Mavic Air 2

107
3 Consumer
Consumer forecast methodology
Consumer drones in this market Growth rates for the base case after
analysis refer to rotorcraft between 0.25 2020 are assumed to mirror the pre-
and 2 kg that are acquired through retail COVID-19 market growth rate, which for
channels. The market is divided into the United States and Europe was
three segments: beginner, prosumer, approximately 6% and for Asia-Pacific
and enthusiast. 2019 unit sales totals are was roughly 10%.
derived from estimates of DJI sales,
Parrot’s financial statements,12 and their The conservative case assumes the
estimated market share. market has already reached maturity in
the U.S. and Europe and will grow at a
DJI is estimated to have a 75% global historical inflation rate of 3%. The
market share of the consumer drone progressive case assumes sales will
market, with 85% of total revenues rebound to pre-2019 levels at around
derived from the consumer segment. 9%. In both the base and progressive
Although Parrot no longer targets the cases, the growth rate tapers off,
consumer market, sales of their legacy reflecting market maturity in 2025 and
drones comprise an estimated 4% of the beyond.
global market.
Consumer drone market breakdown and weighted average

Segment % of Market Prices Extras Total
Beginner
65% $100 +$70 $170
eg. Holy Stone
Prosumer
25% $1000 +$200 $1200
eg. Skydio 2
Enthusiast
10% $1600 +$440 $2040
eg. DJI Mavic 2
Pro
Weighted Average $615

108
3 Consumer
Consumer forecast methodology
Strategy Reasoning
• Improves efficacy of marketing
• More than 65% of consumer electronics
customers research and evaluate products
online.
• Prominent placement at consumer
touchpoints and points of purchase drive
sales.
Influence the • Existing users are powerful advocates for
consumer journey products via word of mouth and product
Customer
from research to reviews.
purchase • Allows more control over the value chain from
design to the end-user
• Selling direct to consumer helps capture
distributor margins and maintain control
over the end-user relationship.
• Strong customer engagement increases
mindshare with the total addressable
market.
• A vertical integration minimizes third party
Maintain close costs, and retains control over the quality and
Production control over speed of manufacturing.
manufacturing • Engineers can iterate and test prototypes with
less lead time.
• Consumer drones are highly elastic
discretionary products in a competitive
market.
• Mass-market models that focus on well-made,
Focus primary easy to use, affordable features that customers
demand and eliminate features consumers do
product on offering
Product Focus not use, are more profitable.
core benefits at • Boundary pushing, high-end drones with
attractive prices state-of-the art features can be developed for
enthusiasts who are willing to pay a premium
price. These features can then be passed down
to mass-market models over time after new
iterations.
109
4 Public Safety
Market Size
Year 2020 2025 2030
6.6 Progressive
$
10
Billion
4.4 5 Base
6
3 2.7 Conservative
8.1 2
0.7
1
110
4 Public Safety
Drones have the potential to dramatically improve and
expand law enforcement and firefighting capabilities,
but they face community concerns, budgetary
challenges, and regulatory hurdles.
From surveying active fire hotspots to (BVLOS), limited battery life, and
delivering messages via light shows,1 community concerns over privacy.
drones are tools government agencies Despite these present-day challenges,
can use to aid public safety. drone adoption within public safety
arenas is likely to accelerate once
Limitations to expanding the use of regulatory concerns are addressed, pilot
public safety drones include restrictions programs achieve success, and drone
on flying beyond visual line of sight funding shifts from discretionary budget
items to operational budget line items.
Image from: Skydio; Skydio 2

111
4.1 Public Safety: Police

Law enforcement agencies must earn community trust before
using drones.
The proliferation of the use of cameras Drones can add another form of camera
has had a consequential impact on technology to policing toolkits but are
police agencies around the world. Today, best used only in departments that have
billions of smartphone cameras, body- earned their community’s trust. To
mounted cameras, and citywide avoid community backlash, law
installations influence how police enforcement agencies will need to
officers do their jobs. establish rules of engagement for where
drones fly, what they surveil, and how
information is stored and analyzed.
Most common uses of drones in responding agencies

Source: PERF Drones--A Report on the Use of Drones by Public Safety Agencies2
Search & rescue 91%
Crime scene photography 85%
Investigating armed & dangerous suspects 84%
Disaster response 84%
Traffic collision reconstruction 81%
Bombs & hazardous materials observation 68%
Fugitive apprehension 63%
Crowd monitoring (e.g. outdoor music 51%

festival)
General surveillance (e.g. high crime area) 27%
Other 14%
112

Drones are up to 10 times less expensive to acquire and operate
than helicopters.
Body cameras are accepted by the Police agencies use helicopters to collect
general population because they add aerial photography for evidence, track
transparency and help hold law suspects in vehicle pursuits, and search
enforcement officials accountable. for ground suspects. Due to their
However, communities may have superior range, endurance, and ability to
difficulty accepting “flying cameras” if sweep a wide area quickly, helicopters
those cameras are used to record will still have a specialized role to play in
criminal acts rather than to keep people law enforcement after drones are
safe. adopted.
Cost of police drone vs. helicopter program

Launching Costs Drone Helicopter

Aircraft (Bell 206LT-Eurocopter $1,100,000-
Aircraft (Skydio 2 - Matrice 600 Pro) $2,000-$6,000 EC135) $3,000,000
Thermal camera (FLIR) $8,000-$15,000 Retrofit (Radios, searchlights, $300,000-$500,000

sensors, etc.)
Equipment (Batteries, case, transceiver, $5,000 Equipment (Suits, safety gear, $12,000
etc.) etc.)
Training & certification $750-$2,500

$1,400,000-
Total $16,000-$29,000 Total
$3,500,000
Operating Costs/hour Drone Helicopter

Hourly amort. purchase cost Hourly amort. purchase
$15-$26 $230-$580
(1,000 hrs.) cost (6,000 hrs.)
Insurance $10 Insurance $35-$50
Electricity cost per hour $0.01 Fuel cost per hour $130
Maintenance per hour of
Maintenance per hour of flight $0.75 $170
flight
Pilot (x1 Police salary & benefits) $65 Pilot (x2 Police salary & benefits) $135
Total $90-102 / hr. Total $700-$1,065 / hr.
113

Police forces will employ drones either as first responders or as
service companions.
Law enforcement drones will be used to officers make better real-time decisions
perform close-range aerial tasks either during emergencies.
through deployment as first responders
or as field service companions to help According to the Center for the Study of
officers gain situational awareness. the Drone at Bard College, at least 910
In a first responder capacity, drones state and local police, sheriff, fire, and
housed in docking stations will be EMS departments in the United States
strategically distributed around a have acquired drones. Law enforcement
precinct so they can be dispatched on agencies make up two-thirds (~600) of
demand in order to quickly assess this total. The majority of these drones
potential threats before human officers are consumer and prosumer models
arrive on the scene.3 such as the DJI Phantom, Inspire, and
Matrice models.4
In a field service companion capacity,
drones deployed from the trunks of As a result of the aforementioned
patrol cars will be used to monitor traffic security concerns over DJI and other
patterns, reconstruct crime scenes, and Chinese-made drones, law enforcement
gather onsite information to help agencies are cautiously adding new
drones to their fleet.5
Chula Vista PD drone program vs. San Diego PD air support unit
Source: Chula Vista PD, San Diego PD
Chula Vista PD San Diego PD

2019 Statistics
Drone Helicopter
Calls responded to 1,037 8,300
First unit on scene 480 (46%) 4,150 (50%)
Arrested suspects 163 (16%) 2,100 (25%)
Response time (mins) 3.27 17

114

Drone companies that support law enforcement can follow a
SaaS business model to maximize long-term customer value.
Tight discretionary budgets mean
agencies in the United States are Law enforcement technology provider
hesitant to abandon DJI drones due to Axon is transforming itself from a
the lack of affordable, domestically hardware company that provides body
manufactured alternatives. In addition, cameras and TASERs to a software as a
city governments have fairly lengthy service (SaaS) company that manages
procurement cycles that limit how captured data, records, and evidence.
quickly the market can grow despite After experiencing low agency adoption
demand. and an inventory buildup of tens of
thousands of its $400 body cameras,
Among the U.S. government-approved Axon offered the cameras, software,
rotor drones, Skydio is well-positioned training, and cloud infrastructure to
to make their drones and services police departments for free for a year.
integral to safe policing operations while Axon grew to control 70% of the U.S.
offering technology superior to DJI at a police camera systems market with
price point many agencies can afford. monthly subscriptions of a now-
The business model for drones as embedded, critical, and sophisticated
essential police hardware will draw software service.
similarities to the business model and
market for body-mounted cameras.
Top three largest police department spending on body cameras (Includes hardware,
software, and cloud storage)
6
Source: Vera Institute of Justice, Levitate Capital Analysis
FY 2020 Est. Annualized

Est. Recurring Body
Police Department Department Spend Per Body
Camera Expenses
Budget Camera
New York PD $5.60B $6.34M $1,280
Chicago PD $1.78B $6.55M $936
Los Angeles PD $1.73B $5.90M $843

115

In 2019, Axon’s software and services incrementally, replacements every two
grew by 42% from 2018 (by comparison, or three years can create massive
Axon hardware grew by 22%) and recurring revenue streams that
represented 25% of Axon’s revenues.7 compound with growth in the install
Police officers spend up to 50% of their base.
time writing reports. Although body
camera services are expensive, the Impact of COVID-19
cameras document case information,
which saves officers significant time. Police and government officials around
While drones may not become as the world have used drones to perform
ubiquitous as body cameras on police remote policing and enforce social
officers in the law enforcement arena, 6
distancing. Although many law
drone companies will experiment with enforcement budgets have been
models that optimize lifetime customer adversely affected by reduced tax
value through recurring revenues, such revenues and budget reallocations,
as SaaS and hardware as a service existing pilot programs are expanding
(HaaS). drone experiments during the pandemic
as agencies turn to technology to
If the hardware becomes indispensable address operational inefficiencies.
to police agencies and improves
Popular law enforcement drones
Skydio 2: DJI Phantom 4: DJI Inspire: DJI Matrice:

Base Price: $1,000 Base Price: $1,600 Base Price: $3,300 Base Price: $5,000
116

Law enforcement forecast methodology
Law enforcement agencies that use specialized first responder drone, and
drones have an average of three drones. 60% will be allocated towards the field
However, some agencies have more than service drone, yielding a weighted
20 drones and are rapidly expanding average of $10,100.
their pilot programs. While many
agencies acquired their drones through Drones have the potential to be as
donations, agencies that procured instrumental to law enforcement
drones using discretionary budgets or situational awareness efforts as police K-
seized and forfeited funds paid an 9s. Therefore, we anticipate that the
average price of $18,000 and a median total addressable market for drones in
price of $10,000 for each drone. police departments will be comparable
to the number of police dogs in each
Future purchases of drones serving as region. With roughly 800,000 police
first responders will cost approximately officers and 50,000 police dogs in the
$20,000 per unit, and drones operating United States, the U.S. K-9-to-officer
as field companions will cost roughly ratio is 1:16. Using a 1:16 drone-to-
$3,500 per unit. We estimate officer ratio yields a total addressable
approximately 40% of police spending market of 50,000 police drones in the
on drones will be allocated towards the United States.
Estimates of TAM for police drones

Drone to
Region Police Officers TAM for Drones
Officer Ratio
United States 800,000 1:16 50,000
Asia-Pacific 6,000,000 1:50 90,000
Europe 1,600,000 1:40 40,000
MEA 1,000,000 1:50 20,000
RoW 3,000,000 1:80 38,000
117

Law enforcement forecast methodology
We used similar ratio calculations for impact the expansion of drones in law
the other four regions to estimate the enforcement. The progressive case
global total addressable market for assumes that more agencies in the U.S.
police drones. will expand their fleets for tactical
BVLOS operations to improve
The conservative case assumes public emergency situational awareness and
acceptance concerns and municipal minimize police misconduct lawsuits.
budgetary reallocations will adversely
Market Size
$ 3.8 Progressive
Billion
2.8
2.8 Base
2.2
1.8 Conservative
1.4
0.5
2020 2025 2030

118
4.2 Public Safety: Firefighting

Drones help firefighters gain situational awareness.
Drones equipped with thermal imaging Conversely, drones operating in the
cameras enable fire crews to quickly same airspace as crewed aircraft will
gain situational awareness and conduct continue to pose a risk to daytime
search and rescue operations through firefighting until sufficient UTM
smoky and other low-visibility infrastructure is developed. U.S. drone
environments. Some drones in operators who interfere with firefighting
development can spray substances from and other emergency response to
angles firefighters cannot reach or wildfires may face criminal penalties. If
deliver items via payload drop to allowed by the FAA and the FCC, U.S.
trapped victims. firefighters could use counter-drone
interdiction to neutralize rogue drones
Smoke and darkness limit crewed from interfering with their crewed
firefighting aircraft to an average of aircraft operations during wildfire
eight hours per day when fighting season.
wildfires. UAVs can effectively conduct
suppression or cargo delivery missions Drones have the potential to become a
during these crewed aircraft no-fly critical firefighting tool, making it
periods to reduce the time, cost, and conceivable that every fire engine in the
damage associated with large wildfires. United States will carry at least one
drone as standard equipment by 2025.
Image from: Skydio; Skydio 2

119

Main barriers to adopting firefighting drones include cost,
compliance, and the status quo.
According to a survey by firefighting Agencies looking to circumvent the

news agency FireRescue1, 57% of fire flight approval process and instantly get
departments that responded had at least eyes over a scene can use drones
one drone. Of the respondents with tethered to fire trucks, which designates
drones, the most common use cases the drones as extensions of the vehicle
were search and rescue operations, instead of as aircraft.
structural or commercial fire assistance,
and natural disaster response. The most popular drones used in
firefighting agencies are from DJI.
The biggest barriers to adopting drone Despite the aforementioned concerns
programs were cost, lack of leadership about using these drones, the Los
interest, and difficulty obtaining Angeles Fire Department (LAFD), one of
certification.11 As with all commercial the largest fire departments in the U.S.,
drone operators, firefighters must has partnered with DJI to introduce a
obtain a Part 107 license to operate a fleet of 11 drones into service. The
drone for commercial use in the United agency is looking to double its fleet over
States, requiring upwards of 80 hours of the next several years.13
training.12
Image from: CB Insights

120

Firefighting drone forecast methodology
Assuming at least one drone per fire equivalent drone for ~$2,500, many
engine, the U.S. has a total addressable agencies will prefer more advanced
market of 70,000 firefighting drones. drones with thermal imaging cameras
This drone-to-fire-engine ratio is and specific firefighting features at a
smaller for other regions due to the cost of ~$15,000.
larger quantity of smaller fire engines.
Our estimates do not include future The conservative case assumes tight
autonomous firefighting air tankers municipal budgets and lack of
because current air tankers are typically leadership interest in adopting
converted versions of old, close-to- firefighting drones will relegate drone
retirement aircraft. Although those use to niche applications among few fire
aircraft are expensive to operate, their departments. The progressive case
relatively low acquisition costs mean assumes that drones will become
operators can afford to underutilize standard equipment for fighting fires.
them until they are needed during Moreover, it assumes that evolving UTM
wildfire season. infrastructure will allow routine
firefighting drone operations by 2025.
While some agencies will opt for a base
version of a DJI Phantom or an
Estimates of TAM for firefighting drones

Drone to Fire Engine TAM for

Region Fire Engines
Ratio Drones
United States 70,000 1 70,000
Asia-Pacific 600,000 1:3 200,000
Europe 170,000 1:2 85,000
MEA 100,000 1:2 50,000
RoW 400,000 1:6 66,000
121
4 Public Safety
Strategies for succeeding in the public safety drone segment
Strategy Reasoning
•Experienced talent brings instant relationships

Add talent with from an existing network of potential buyers
municipal and an understanding of the markets and
government procurement process.
Talent
procurement •The public safety sector procurement process is
experience to largely relationship-based with departments
your team relying on advice from their network before
making a purchase.
•Interoperability with existing public safety

ecosystems of hardware and software reduces
the ancillary investments departments must
make before adopting new equipment and
Ease adoption
Support services.
frictions
•Government agencies are more likely to acquire
products that expand the functionally of their
existing platforms than products that require
new systems.
•Public safety agencies are budget constrained
and are likely to try new technology to
improve their work after removing the
budgetary barriers to adoption.
Supply the
•Allows for a deeper understanding of the
necessary
challenges customers are trying to resolve
hardware and
Support through co-development of solutions that
support for a trial
address their pain points.
run at little or no
•Cultivates success stories that fuel
cost
interdepartmental referrals and testimonials.
•Long-term software and recuring revenue
streams can make up for short-term losses of
revenue.
122
5 Logistics
Market Size
Year 2020 2025 2030
47 Progressive
$
Billion 33 Base
6.0
8.1
3.6
<0.1 7.1 Conservative
2,700 Base
Million
Deliveries
117
123
5 Logistics
Logistics has the potential to be the largest market in the
drone economy by the end of the decade. However,
widespread drone delivery operations will require a
clear regulatory framework, robust uncrewed aircraft
traffic management infrastructure, and broad
community acceptance.
So far, fast delivery by drone is only a development, but drone logistics efforts
reality for select hospitals and pilot have made significant progress in 2019
communities around the world. While and 2020.
further expansion of pilot programs
beyond time-sensitive and high-cost For example, in 2019 UPS partnered
cargo is expected soon, the current pace with Matternet, the leading provider of
of regulatory advancement means drone-based logistics services in urban
routine autonomous drone delivery environments, to transport medical
operations are unlikely to occur before samples to testing labs at WakeMed’s
2023. flagship hospital in Raleigh, North
Carolina.1
Government regulation has historically
lagged behind the pace of technological
Image from: Matternet; M2

124
5 Logistics
Regulations are evolving, and pilot programs are expanding.
Since 2019, Matternet and UPS have Wing also began drone delivery trials in
transported more than 8,000 lab Christianburg, Virginia, and is
samples. Their network expanded in delivering more than 100 different
2020 to include Wake Forest Baptist products for Walgreens, including over-
Health in what is considered the first the-counter medical goods, snacks, and
hub-and-spoke model for drone drinks.3
deliveries in the U.S.
Walmart has partnered with Flytrex,
In addition, in 2019 Wing, a subsidiary Zipline, and Quest Diagnostics for on-
of Alphabet that provides drone-based demand deliveries in response to
delivery, was granted regulatory Amazon’s approval from the FAA to test
approval for its first public drone Prime Air delivery drones, raising the
delivery service in Canberra, Australia, stakes in the race to bring commercial
after completing more than 3,000 drone delivery to market.4
deliveries during an 18-month trial.2
Restrictions, as expected, are stringent. Widespread delivery operations of
Wing’s drone cannot fly close to people thousands of delivery drones will
or over main roads and can fly only require integrated air traffic
between the hours of 7 a.m. and 8 p.m. management systems, universal safety
on weekdays (8 a.m. to 8 p.m. on rules, and comprehensive drone
weekends). communication standards.
Image from: Wing; Hummingbird V2-7000

125
5 Logistics
COVID-19 has advanced years of e-commerce transactions and
demand for drone delivery.
While regulatory bodies in the United UPS and Matternet have expanded
Kingdom, Australia, and China have less deliveries of testing samples and
stringent requirements for early-stage personal protective equipment (PPE).
delivery drone operations, the United
States maintains outsized influence on In addition, Zipline, a San Francisco-
global aviation safety regulation. As a based drone delivery company, has
result, long-term global drone delivery received a first-of-its-kind FAA waiver
regulations are likely to mirror U.S. for using their long-range drones to
frameworks. deliver PPE to North Carolina-based
healthcare provider Novant Health.6
The accelerated shift to e-commerce and Zipline has already completed more
the growing need for rapid medical than 86,000 commercial deliveries and
transport due to COVID-19 have has been using contactless drone
prompted the FAA to hasten approvals delivery to transport COVID-19 test
for drone delivery services in the United samples from rural locations in Ghana
States.5 and Rwanda to labs as far as 70 miles
way.
Image from: Zipline

126
5 Logistics
Autonomous last-mile drone delivery for low-density routes will
become less expensive than traditional courier service.
The package courier industry is
continually striving for faster delivery. The future cost of drone delivery will be
Whereas seven-day delivery was up to 80% lower than current charges
common a decade ago, two-day delivery for next-day delivery. However, the
has become the new standard, and margins for conventional last-mile
consumers now expect next-day or delivery increase with route density
same-day delivery of essential items. (number of packages delivered per trip)
Autonomous drones will be able to and drop size (number of packages
deliver packages faster than delivered per stop).
conventional delivery vans at a lower
cost per mile.
Delivery fee comparison: drones vs. today’s services

$70
Delivery Drone
$60 2020
$60.00
$50
UPS
$40 $33.50
FedEx
Express
$32.50
$30
USPS
Priority
$22.75
$20 Zipline (est.)
$17.00
Instacart Google
Delivery Drone $8.25 Amazon Express
$10 Amazon Prime Shipt Prime/ $7.92
2025 Delivery Drone
Now $8.25 Walmart
$9.00 2030
$4.00 $7.99 $5.99
$-
30 Minutes 1-2 Hours Same Day Next Day
127
5 Logistics
Last-mile drones will primarily serve low-density single-drop
routes.
Courier services are therefore likely to make more sense in dense urban
use drones for single-parcel deliveries in settings. In the long-term, some delivery
low-density areas and retain ground vans will be equipped with docking
vehicles for high-density and large-drop stations to allow drones to complete
routes. Drone deliveries tend to make single-drop deliveries that deviate from
more sense in sprawling suburban and the van’s optimized route.
rural areas, whereas delivery vans often
Drones are the most economical means of fulfilling the least-profitable routes in
low-density rural areas.
7
Source: McKinsey & Company
Increasing drop density/decreasing cost

128
5 Logistics
Early drone deliveries to suburban areas will be a premium
service until the industry scales.
For current and near-term customers of until increased scale and autonomy
drone delivery services, the value improve single-trip delivery economics.
proposition of speed and availability will
need to supersede the cost savings For drone deliveries that originate from
associated with route density and warehouses or store rooftops, conveyor
batched delivery. As a result, drone belts will continuously pass outbound
delivery will remain a premium service packages to waiting drones. The drones
offered to support time-sensitive will autonomously fly to their
medical deliveries, emergency destination to deliver their payload and
equipment delivery, and disaster relief then return for a new parcel and battery
swap.
Delivery cost per parcel will fall over time with more scale and automation
$120
$110
$100
$80
$60
$56
$40
$37
$20 $12
$6
$5
$-
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
129
5 Logistics
Every link in the shipping value chain must be examined for
efficiency opportunities.
Because shipping is a price sensitive during each trip. As parcels are

business, couriers that move millions of transferred to smaller vehicles, the per-
packages per day examine every link in mile cost of transportation typically
the logistics supply chain, including the increases –with the most expensive
often-overlooked middle-mile journey, being a single vehicle carrying a single
to minimize costs per parcel. parcel.
Middle-mile logistics refers to the As a result, drones in the near term are
transport of goods from ports to likely to be more expensive per kg-mile
distribution centers, between than fully loaded trucks. However,
distribution centers, and from middle-mile drones can reduce the
distribution centers to stores. hours of transportation and handoff
times associated with trucks and other
Whereas last mile delivery drones
ground vehicles and transfer the
compete with courier-owned delivery
economic value of time savings to the
vans and crowdsourced delivery models,
sender and receiver.
middle-mile drones will compete with
semi-trucks and intermodal freight Regions that are far from metropolitan
networks. Middle-mile operators are hubs are typically the least profitable
investing in electric and autonomous areas to deliver goods and require
trucks to lower their cost and emissions, networks of cargo feeder planes and
but future ground vehicles will still be freight brokers to move parcels on
subjected to the limitations of ground behalf of larger couriers. Because hub
infrastructure. and spoke operations using middle-mile
drones can circumvent airport
Generally, the cost of moving freight is
infrastructure and reduce the number of
inversely proportional to the amount of
handoffs necessary to ship parcels to
freight moved simultaneously.
remote regions, middle-mile drones
Consequently, ships and trains offer the
provide remote locations with access to
lowest cost per ton-mile because they
fast air cargo delivery service.
distribute variable costs over large
tonnage of goods and long distances
130
5 Logistics
Middle-mile drones enable express cargo shipping to rural areas.
In enterprise logistics, large companies The time savings afforded by faster

that own their distribution centers and inventory replenishments and precise
brick-and-mortar locations control both movement of goods without the frictions
ends of the middle-mile journey and are of multiple change overs will enable
likely to use autonomous vehicles for brick-and-mortar retailers to seamlessly
“milk run” routes that remain constant flow products across their instore and
over time. online omnichannel to better compete
with online only retailers.
Rapid logistics supply chain example: from a factory in Shanghai, China, to a customer in
rural Northern California.
Drones in the middle mile and last mile segment can significantly reduce shipping times.
Levitate Capital Analysis
Manufacturer
Initial Airport Sorting Facility Urban Airport
Location
Time: 1 hr. Distance: 50 miles Time: 2 hrs. Distance: 4,305 miles Time: 3 hrs. Distance: 2,016 miles
Time: 2 hrs. Time: 9.5 hrs. Time: 4 hrs.

1 2 3 4 5 6
First-mile
Time: 2.5 hrs. Time: 0.8 hrs.

Regional Distribution Time: <0.5 hrs.
Urban Airport Center Store Customer
Time: 2 hrs. Distance: 300 miles Time: 2 hrs. Distance: 100 miles Distance: Varies
Time: 10 hrs. Time: 2 hrs. Time: Varies

7 8 9 10 11 12
Rural Airport
+1 +1
Time: 1 hr. Time: 1 hr.

Time: 2 hrs.
Middle-mile Last-mile
131
5 Logistics
The role of consumer delivery drones will depend on the net
benefits the technology offers.
Due to safety concerns related to the more customers who want access to on-
proximity of electric Vertical Takeoff demand deliveries. Finally, with more
and Landing (eVTOL) aircraft propellers delivery drones and products available
to humans and ground obstacles, most to provide delivery services, consumers
drones will deliver their packages via stand to benefit from fast and reliable
winch or purpose-built delivery hubs. service, leading them to push for more
legislative support from the ground up.
To achieve widespread adoption,
delivery drone companies must serve If delivery aircraft are too noisy, if drone
three constituents: customers, delivery is available only to a privileged
merchants, and communities at large. few, and if deliveries become more of a
nuisance than a benefit to the
During pilot programs, drone delivery community, then drone delivery
services must first deliver on their operations may experience community
promise to provide a safer and more backlash that could hamper the business
sustainable approach to package model. Furthermore, demand for
delivery in order to generate the delivery services tends to increase
legislative support needed to expand during periods of inclement weather, so
their operations. Once operations have delivery drones must be able to fly in
expanded, merchants will be enticed to any weather in order to take advantage
use drone delivery platforms to reach of peak demand.
Image from: Elroy Air; Chaparral

132
5 Logistics
Drone logistics forecast methodology
Although the market for drone deliveries For drones carrying less than 3 kg, our
can be divided into rural and urban, our analysis assumes each drone will cost
analysis divides up the market based on $40,000 per unit, have a lifetime of
drone payload-carrying capacity. People three years, incur annual maintenance
living in rural and remote areas will be and depreciation costs of $14,000, use a
the primary consumers of drone delivery 1:1 operator-to-drone ratio at a cost of
services worldwide due to their sparse $100,000 per year, and maintain an
populations and the significant time annual insurance cost of $6,600.
saved in circumventing underdeveloped Assuming the drone can complete 7,200
ground infrastructure. deliveries in its lifetime, our estimated
cost per delivery during the first phase is
Payload-carrying capacity can be $56. We assume a 5% markup in the
divided as follows: drones that can carry first phase to arrive at a per-delivery
up to 3 kg (Amazon and Matternet price of $59. By the middle of the
drones), drones that can carry up to 25 decade, we expect the cost of the drone
kg, and drones that can carry more than to be cut in half, the number of
100 kg (Elroy Air Chaparral and other deliveries completed in a lifetime to
middle-mile logistics drones). double, and a 1:5 operator-to-drone
ratio at a reduced cost of $75,000 per
year.
Estimates of delivery drone operation costs by 2030

>100kg (Middle-
Expenses <3 kg 3kg < 25kg
Mile)
Unit cost ($) 20,000 140,000 1,000,000
Annual Maintenance ($) 4,000 18,000 100,000

Annual
2,000 9,000 20,000
Insurance ($)
Operator
15,000 15,000 15,000
(1:5) ($)
Lifespan (years) 5 8 15
133
5 Logistics
Drone logistics forecast methodology
With a 50% margin, the price will drop challenges for drone logistics slows
to $14 per delivery by 2030. By the mid rollout of full-scale commercial
2030s, we expect further performance operations and cedes substantial market
and efficiency improvements to yield a share to autonomous ground vehicles.
$6 price per delivery with a 75% margin.
The same mathematical analysis was The progressive case assumes full-scale
performed for both the medium-lift and commercial deliveries will occur before
heavy-lift delivery drones. 2024 and will allow drone logistics
companies to rapidly assume rural and
The conservative case assumes the suburban delivery market share.
regulatory and UTM infrastructure
Estimates of delivery drone capabilities by 2030

>100kg (Middle-
Capabilities <3 kg 3kg < 25kg
Mile)
Speed (mph) 40 60 100
Delivery Radius (miles) 12 18 150
Max Flight time (mins) 45 45 180
Deliveries per Day 10 10 5
Deliveries per Year 2880 2880 1440

134
5 Logistics
Strategies for succeeding in the drone logistics segment
Strategy Reasoning
•Parcels that require reliable, same day

Focus on markets delivery to rural locations are the
where drones offer primary market for drones.
Market
a competitive Capturing heavily traffic routes of
advantage this category of cargo is key to
scaling faster than the competition.
•Each new environment comes with a

different set of expectations. Proof
Adapt delivery of concepts in one region may not
Flexibility operations to suit translate to realities in another.
each market •Building and operating to the strictest
regulatory requirements can ease
transitions to new locations.
Collaborate with
•As seen with ridesharing, regulation
stakeholders
and restrictions move faster when
(residents, elected
there is widespread public support.
Community officials, business
•A primary source of hesitation around
owners) in the
delivery drones is lack of knowledge
community where
about the drone operation.
trials are ongoing
135
6 Passenger
Market Size
Year 2020 2025 2030
6 Progressive
17
$
Billion
8.1 2.2 Base
0 0.2
2 0.7 Conservative
73 Progressive
Millions
of Passengers
27 Base
0 1 9 Conservative
136
6 Passenger
Passenger electric vertical takeoff and landing (eVTOL)
represents the subset of the drone economy with the
most technology and regulatory challenges. By 2030, the
foundations laid by the enterprise and logistics drone
market are expected to provide a framework for rapid
growth in eVTOL passenger transportation.
At present, passenger transport by
eVTOL is more of an idea than a reality. In the near term, numerous passenger
Following patterns of evolution of eVTOL manufacturers will produce
conventional aircraft development and limited numbers of aircraft that will not
passenger transport by aircraft in the be economically sustainable when they
twentieth century, advancements in go into production. Over time, air taxi
technology, flexibility in regulations, hangars will consolidate around the
and the allure of rapid regional most promising technologies that have
transportation by air will make eVTOL a the best performance and safety records.
practical means of traveling medium
distances by the end of the decade.
Image from: Volocopter

137
6 Passenger
Passenger electric vertical take-off and landing (eVTOL) aircraft
will be part of a larger ecosystem of advanced mobility.
Metropolitan areas around the world Future urban congestion will be

need billions of dollars of investments in addressed by a confluence of emerging
roads, airports, and railway systems. technologies, including autonomous
While roughly 80% of the world’s ground vehicles, adaptive traffic signals,
population has never taken a flight,1 and smart corridors.
eVTOL will offer a critical,
infrastructure-light method of serving In addition, proliferation of autonomous
the aviation needs of a growing ground vehicles may arguably precede
population. the commercial operation of a piloted
eVTOL taxi service. Innovations in the
Adoption of eVTOL technology can automotive industry, such as electric
enable transport over underdeveloped vehicles and autonomous driving, will
infrastructure. It can also provide an serve as catalysts to the development of
avenue for reducing the load on built energy dense batteries, improved
environment while unlocking potential artificial intelligence, and model
applications and business derivatives frameworks for the regulatory and
that are inconceivable today. EVTOLs consumer acceptance of advanced air
alone, however, will not solve urban mobility.
traffic congestion problems.
Image from: Lilium

138
6 Passenger
Passenger eVTOL operations must be safer than driving to win
the public’s trust.
The inherent mindset in aviation is to will be deemed insufficient if it is not
avoid risk. Consequently, a mass market determined to be at least as safe as
for passenger eVTOL operations is ground transportation.
expected to emerge only after safety and
performance records demonstrate that Widespread acceptance of autonomous
they are a reasonable alternative to enterprise and delivery drones by the
transporting humans and cargo over end of the decade is likely to build the
regional distances. general public's trust in autonomous
flying vehicles. In addition, Uncrewed
Air incidents are more catastrophic than Aircraft Traffic Management (UTM)
car accidents, so aviation requires a infrastructure for passenger eVTOL will
standard of safety far higher than most build upon the advancements in
other transportation methods. The truth technology and lessons learned from the
is that eVTOL may never achieve the uncrewed delivery and enterprise air
0.24 fatal incident per million flights2 traffic that will precede passenger
safety record of airliners; however, the eVTOL use.
transportation benefits eVTOL offers
Fatality rate per 100 million miles traveled in the United States
3 4
Source: National Safety Council, Insurance Institute for Highway Safety
U.S. Air Carriers (2018) 0.0001
Biking 0.12
Walking 0.3
Driving (2018) 1.13
Driving (1923) 18.65
U.S. Air Carriers (1960) 44

139
6 Passenger
Traffic congestion will return post-COVID-19.
COVID-19 has prompted the largest regions around the world. This
shift to telework in history, leading phenomenon is analogous to the effects
many to question whether urban traffic of globalization on manufacturing in the
congestion will be a relic of the past. 1990s and 2000s.
Smart businesses and a savvy U.S.
workforce are taking full advantage of However, cities have consistently
new technologies such as collaborative bounced back from periodic mass
software, high-speed connectivity, exoduses from urban areas, and some
telecommunication peripherals, and cities anticipate that traffic congestion
improved data security, possibly causing will climb back to record levels after the
a seismic shift in how we assess the need pandemic subsides.5 For example, car
for commercial offices and daily sales have spiked as suburbanites and
commutes. city dwellers move farther out from city
centers and seek alternatives to mass
Perhaps more importantly, the rapid transit. Even if people do not commute
telemigration has led to the export of to work, people will continue to travel by
service-sector jobs that require college car to take advantage of urban
and advanced degrees from densely entertainment and economic activity,
populated, first-world urban areas with causing congestion and pollution to
a high cost of living to developing return.
Image from: Joby Aviation

140
6 Passenger
The cost of transportation by eVTOL will be comparable to that
of current ground transportation methods.
The first deployment of eVTOL aircraft Ridesharing giant Uber generated 23%
will likely be in a point A-to-A curated of its 2019 gross ridesharing bookings
service for tourists by 2025. As from five urban areas: Chicago, Los
suggested in our estimated cost of $8.69 Angeles, New York, the San Francisco
per mile, or $2.17 per available seat Bay Area, and London. Moreover, 15%
mile, by 2028, transportation by eVTOL of rides are trips that either started or
will be a premium service comparable in were completed at an airport, and Uber
per-mile price to Uber Black but far less expects this percentage to increase in
expensive than a helicopter. Therefore, the future.6 A robustly integrated air
the second phase of eVTOL commercial traffic management system will be
deployment is anticipated to involve critical in deconflicting airspace with
piloted operations along existing hundreds of new inbound and outbound
helicopter taxi routes. eVTOL services.
In this second phase, many eVTOL Like airliners, air taxis will need high
operations are expected to operate as utilization rates and high load factors to
shuttles between airports and sprawling make the unit economics accessible to a
metropolitan areas, similar to mass audience.
ridesharing today.
Cost per mile to travel from Downtown Los Angeles to Los Angeles International
Airport
Helicopter $46*
Uber Black $4.60
eVTOL 2028 $3.60*
Taxi $2.35
UberX $1.70
eVTOL 2034 $0.64*
Personal Car $0.50
eVTOL 2040 $0.22*
Bus $0.09
*Helicopter and eVTOL costs are represented as cost per available seat mile.
141
6 Passenger
Initial passenger eVTOL aircraft will operate like airlines.
Early eVTOL operations for the general When compared to the 6.9 billion trips
public most likely will not be an on- and $50 billion in gross ridesharing
demand service but rather a scheduled bookings that Uber completed in 2019,
network of optimized flights to high- our models suggest the 2040 global
demand areas that fill as many seats as passenger eVTOL market will resemble
possible and minimize time on the the market for Uber today.
ground. Only after cities have tens of Uber’s original vision for aerial mobility
vertiports (a type of airport for aircraft included an aerial ridesharing platform
that land and take off vertically) with that enabled rapid city-to-suburb
thousands of passengers flying each day transportation for its eight eVTOL
on completely autonomous aircraft will aircraft manufacturing partners. Uber’s
on-demand taxi operations scale. Elevate Division, which originally
Our estimate of 1.2 billion passengers targeted public demonstrations in
traveling on eVTOLs in 2040 represent Dallas, Los Angeles, and Melbourne in
roughly 30% of the 4.4 billion 2023, will now be spearheaded by Joby
passengers who traveled on scheduled Aviation.8
flights in 2018.7
Estimates of passenger drone capabilities by 2030
Capabilities 2030 eVTOL

Cruise Speed (mph) 125
2030
Capabilities
Average Trip Distance 60
eVTOL
Average Trip time + Charging (minutes) 60
Cruise Speed (mph) 125
Trips per Day 16
Average Trip Distance 60
Trips per Year 4,600
Average Trip time + Charging (minutes) 60
Trips per Day 16
Trips per Year 4,600

Image from: Volocopter

142
6 Passenger
Vertiports must be strategically located in key destination
centers.
Vertiports will connect airports, city traffic on the door-to-door trips that
centers, transportation hubs, and other complicate helicopter taxi services
heavily trafficked locations around today.9
metropolitan areas. Whereas cities like
Sao Paulo, Mexico City, and Tokyo have If vertiports are located too far from key
hundreds of heliports, dozens of destination centers, then the time saved
strategically placed vertiport in flight could easily be consumed by the
infrastructures will be needed in most time required to commute to and from
cities to reduce the impact of ground vertiports.
Downtown Los Angeles

Downtown
Los
Angeles
Los Angeles
International Airport
Ground Distance: 19 miles
UberX:
Time: 30-70 mins.
Cost: $32.00
eVTOL (2030):
LAX
Time: 10 mins. Airport
Cost per Seat: $18.00
Downtown Los Angeles
Los Angeles
International Airport
143
6 Passenger
Noise and safety concerns will complicate zoning for vertiports.
While continued innovation in propeller aircraft traffic and identify communities
design and drone acoustic technology that can form a symbiotic relationship
will make eVTOL quieter, noise with a vertiport to ensure long-term
concerns may restrict early operations in viability.
urban environments to negotiated flight
paths and scheduled windows of City blocks that stand to benefit the
operation. Vertiport developers and city most from a rapid transit hub, such as
planners must consider stakeholders’ those with many business travelers and
safety and throughput concerns airport commuters, will be among the
regarding inbound and outbound first to approve vertiport operations.
Canary Wharf
Canary
Wharf
Gatwick Airport
UberX:
Time: 1.25 hours
Cost: $85.00
eVTOL (2030):
Time: 20 mins.
Seat Cost: $90
Gatwick
Airport
Gatwick Airport
UberX:
Time: 1.25 hours
Cost: $85.00
eVTOL (2030):
Time: 20 mins.
Seat Cost: $90

144
6 Passenger
Early deployment of passenger eVTOL will be a premium
experience.
Cities are unlikely to invest in vertiport therefore, the passenger loading and
infrastructure without substantial offloading infrastructure will need the
private sector contributions. Travel by ambiance of a members-only airport
eVTOL will be a premium experience in lounge to meet the expectations of
the early phases of deployment; premium-paying customers.
Estimates for the number of vertiports per city of 1 million people

Average # of Vertiports per Average # of Vertiports per

Region
city of 1M in 2035 city of 1M in 2040
Estimates for the number of vertiports per city of 1 million people
United
Levitate States
Capital Analysis 35 117
Asia-Pacific 18 60
Europe 18 60
MEA 2 16
RoW 1 10
Image from: Skyports

145
6 Passenger
Passenger transportation forecast methodology
Our analysis estimates that initial
passenger eVTOL will cost ~$3.5 Vertiport fees will be included in the
million, roughly the same as a five- eVTOL operational expenses much in
passenger Bell 407 helicopter, and will the same way airport fees are added to
decrease to about $1 million per vehicle the cost of plane tickets. Our analysis
by 2035. Initial trip distances will start assumes each vertiport will support an
with intercity commutes of ~30 miles by average of four eVTOL operations and
2028 and increase to up to 100 miles by cost slightly more than $2 million to
2035 as battery technology and construct and just under $400,000 to
propulsion systems improve. operate annually.
While the base case suggests some The conservative case assumes
passenger eVTOL companies may start passenger eVTOL operations simply
generating revenue by 2025, we do not replace helicopters in general aviation
expect full-scale passenger operations and commercial operations without
until 2028. Public passenger eVTOL growing into a mass-transit market. The
flights before 2025 will likely be progressive case assumes passenger
demonstration projects. Our analysis eVTOL becomes an extension of airline
also assumes all operations before 2030 passenger service that develops enough
will be piloted and that pilots won’t be scale to transition to on-demand
eliminated from the process until after operations.
2035.

146
6 Passenger
Strategies for succeeding in the passenger transportation
segment
Strategy Reasoning
•Passenger eVTOLs may not operate for

5-8 years. Venture-backed companies
Run a lean must hit milestone objectives as
Capital
operation leanly as possible or face substantial
dilutions from frequent investment
rounds.
•Airlines generate 10-15% of their

Design cargo revenues from transporting freight in
carrying the excess space of their cargo hulls.
Cargo capabilities into •Cargo will provide an additional revenue
the passenger stream and allow a more flexible
eVTOL business model during passenger
operations.
147
7 Conclusion
and field operations, and ubiquitous
The drone economy is part of a global
hybrid teams of humans and machines.
move into an age of robotics. The future
of the drone economy will be
To date, drone companies have raised
characterized by autonomous ground
more than $4 billion to push the
vehicles and aircraft, connected factories
frontiers of drone engineering.
Selected drone companies by capital raised
Source: Crunchbase, Levitate Capital Analysis
Joby Aviation $721M

DJI
Selected drone companies by capital raised
Lilium
Anduril
Source: Crunchbase, Levitate Capital Analysis $721M
Zipline
3DR
Skydio
Volocopter
PrecisionHawk
Airobotics
Shield AI
Drone Deploy
KittyHawk
Volansi
Percepto
DeDrone
Kespry
Yuneec
Skycatch
Delair
Propeller Aero
Matternet
D-Fend Solutions
Karem Aircraft
Wingtra
Elroy Air
Flirtey
Vantage Robotics
Teal $13M
$- $200 $400 $600 $800
$13M
148
7 Conclusion: Key technologies to watch

Autonomy
As with other advanced robotics in Primary benefits of autonomy
industrial operations, today’s drones
Productivity:
have superior perception, adaptability,
and mobility to conventional robots. • Reduce risk to humans and
Advancements in computer vision and enable humans to focus on non-
artificial intelligence for autonomous routine tasks.
cars have been integrated into • Enable faster setup and efficient
enterprise, logistics, and passenger and stable operations without
drone technology, which operates in extensive training.
aerial environments that have fewer
obstacles and rules than vehicles on the Consistency:
ground. • Collect comparable datasets.
Reducing the risk of danger to humans • Reduce the risk of human error.
and limiting the need for human labor • Predict schedules and flight paths
are the primary value proposition for for logistics and passenger
adopting drones in all sectors. As such, drones.
further development in autonomy is
Capability:
among the most critical enablers of
continued growth in the drone economy.
• Enable orchestrated control of
As the costs of sensors and computing
worksites by deploying
power continue to decrease, software autonomous drones alongside
and artificial intelligence will other robotics and stationary
increasingly drive value and assets.
functionality. • Allow scalable drone operations
through swarming and
accommodation of more
sophisticated software.
Autonomy differs from automation.
SelectedAutomation
drone companies by capital raised Autonomy
Source: Crunchbase, Levitate Capital Analysis
Drone follows orders about destination Drone makes decisions on destination,
and route but cannot make decisions. route, and controls in real time.
VS.
Automation Autonomy
Drone follows orders about destination VS.
and route but cannot make decisions. Drone makes decisions on destination,
route, and controls in real time.
149

Autonomy
Advanced autonomous drones currently achieve autonomy levels 3 and 4. Logistics
and passenger drones must achieve autonomy level 5 to scale into widespread
operations.
Source: Drone Industry Insights,1 Levitate Capital Analysis
Autonomy Level Level Level Level Level Level

Advanced
Level autonomous
0 drones
1currently
2
achieve autonomy
and passenger drones must achieve autonomy level 5 to scale into widespread 3
levels 3 and 4.
4
Logistics
5
operations.
Human
Involvement
Source: Drone Industry Insights,1 Levitate Capital Analysis
Machine
Involvement
Degree of No Low Partial Conditional High Full

Autonomy Autonomy Autonomy Autonomy Autonomy Autonomy Autonomy
Description Pilot is always Pilot remains Pilot remains Pilot monitors Pilot is Craft uses
in manual in control. responsible the craft’s removed from artificial
control of the for safe progress. operation but intelligence
drone. Craft has operations. can intervene. to plan its
control of vital Craft can flight and
functions. Craft can take perform all Craft has learn from
over heading functions redundant its
and altitude. under certain systems to environment.
conditions. maintain
operations if
one fails.
Obstacle Sense &

None Sense and Alert Sense & Navigate
Avoidance Avoid
Racing, Photography Mapping, Mapping, Delivery, Future of

Recreation & filming surveying, surveying, inspection & delivery &
Application spraying & inspection & maintenance passenger
seeding maintenance drones
150

Energy storage and consumption
heavy-lift and long-distance drones are
Although passenger eVTOLs are
likely to be hybrid-electric aircraft that
building upon the same battery
use electric motors for propulsion in
technology used in electric cars, they
draw power more quickly and for longer addition to fuel-powered generators.
periods of time, and they must hold
reserve power to safely hover and land Sustainable electric flight depends on
in case of emergency. Therefore, battery the battery and aircraft design.
technology and energy consumption are Engineers are using lightweight
significant technological considerations composites and optimized aerodynamics
for passenger and logistics drone to shave ounces in order to achieve the
manufacturers. highest lift-to-drag ratio possible and
reduce battery power requirements.
Beyond the airframe, logistics and
Specific energy is a per-unit mass metric
passenger drone manufacturers are also
for an energy source’s ability to store
shaving weight off avionics, motors, and
energy and defines a battery’s capacity
other onboard flight systems. As a
in weight (Wh/kg). Today’s best
result, leading passenger eVTOLs
batteries have a specific energy of
currently in development can travel as
around 250 Wh/kg. Industry experts
far as 150 miles at up to 200 mph.2
estimate that a battery with a specific
energy of 800 Wh/kg is required for
reliable long-distance electric flight. For New enterprise and consumer drones
reference, jet fuel has a specific energy are exploiting battery technology and
of 12,000 Wh/kg. We anticipate battery low-power-consumption computer chips
energy densities of 400 Wh/kg by 2025 developed for the smart phone industry
and 500 Wh/kg by 2030. to extend battery life. In addition,
manufacturers of small drones use
miniaturized sensors and composite
Consequently, near-term electric aircraft
materials to reduce the drone’s weight
will travel only short distances and have
and extend battery life.
limited load-carrying capacity. Early
151

Noise reduction
Drones today are loud machines. Most noise-sensitive environments. Noise is
drone-captured footage are either filmed among the primary concerns for
with the drone at a far distance or edited communities that will see ubiquitous
to remove the onboard audio. delivery and passenger drones. While
noise reduction technology is on the
The multiple small propellers on drones frontier of emerging drone technology,
and eVTOLs must spin faster than a the industry is still far from achieving
single large propeller on a helicopter to acceptable noise levels.
generate lift. The disturbance created
from multiple propellers generates loud, Decibels (dB) are relative units of
high-pitch audio frequencies. The faster measurement for the intensity of a
a propeller rotates, the more noise it sound on a logarithmic scale. While the
generates. dB scale is based on sound intensity, A-
weighted decibel levels (dBA) measure
These high noise levels compromise relative sound intensity as perceived by
drones’ ability to conduct missions in the human ear at a given distance.
Drone noise levels compared to other equipment and environments.

Source: Kimley-Horn and Associates,3 The Conversation,4 Levitate Capital Analysis
Drone noise levels compared to other equipment and environments.

Source: Kimley-Horn and Associates,3 The Conversation,4 Levitate Capital Analysis
152

Noise reduction
Enterprise and consumer drones average above 65dB in a 24-hour
hovering at an altitude of 15 meters can period.6
be louder than 65 dBA, and passenger
eVTOLs at 30 meters can be as loud as Technologies under development for
95 dBA. For context, OSHA’s reducing drone noise levels include
permissible noise exposure limit is 90 propeller designs that combine large
dBA for an eight-hour time-weighted blade areas with low tip speeds,
average.5 The exposure time is cut in lightweight materials that reduce the
half for every 5-dBA increase. If noise amount of lift required to fly the aircraft
levels exceed 80 dBA, people must speak (allowing slower propeller speeds), and
loudly to be heard. For noise levels ducts that reduce the intensity of noise-
above 85 dBA, people must shout to contributing vortices.
communicate with others an arm’s
length away. Leading passenger eVTOLs hovering 30
meters away can achieve noise levels of
Noise levels will affect the frequency of 76 dB. However, despite promising
passenger and delivery drone progress on noise reduction, the
operations. The FAA suggests aircraft industry still has a ways to go before
noise in residential areas should not widespread adoption.

153
7 Conclusion
As drone technology continues to government support. The most
attractive opportunities in the enterprise
graduate beyond military and
drone space center around high-value
recreational uses and improve
software. The primary value enterprises
commercial productivity, accelerate
derive from drones comes from the data
logistics, and transport humans, its
they collect and the software they use to
economic potential will continue to
analyze that data; therefore, unless
break down technology and regulatory
coupled with mission-critical software,
barriers.
drone hardware will become
increasingly commoditized.
Today, some of the most attractive
investment opportunities in the drone
While drone-based logistics could
economy serve the largest market:
become the largest market by 2030,
defense. Government R&D funding
companies in the sector currently face
allows drone companies to rely less on
more regulatory and technology barriers
variable venture capital and more on
than all other sectors except passenger.
non-dilutive fixed-priced contracts.
The most attractive drone logistics
Despite new programs to improve
companies have a track record of
partnerships between the U.S.
receiving regulatory approvals in
Department of Defense and the private
multiple geographies and forming
sector, government contracts are still
meaningful partnerships with
difficult to win. Therefore, drone
corporations that ship products in high
companies that have a successful record
volumes.
of winning government contracts are
likely to have a resource advantage over
Passenger drones are the riskiest
competitors that rely solely on venture
opportunities in the drone economy.
capital.
Although the segment could become the
largest market for drones in the 2030s,
The most attractive investment
it is the farthest away from generating
opportunities in the drone economy also
meaningful revenue and will require the
prioritize artificial intelligence (AI) as a
most capital. The most attractive
core driver of value. Outside the
companies in this space are those that
consumer market, every market
are closest to certification with global
segment in the drone economy requires
regulators and those making significant
autonomous drones in order to achieve
progress in extending range, minimizing
widespread adoption. Drone companies
noise, and reducing system complexity.
that have managed to recruit the best AI
engineering talent amid the worldwide
The drone economy evolves every year,
shortage of AI engineers stand to gain a
and while many variables could change
competitive advantage. As with many
the trajectory of our industry forecast,
industries that were jumpstarted with
we will stay on top of exciting new
defense funding, the commercial sector
developments and opportunities as they
will eventually outgrow the need for
occur within the space.
154
8 About Us
About the author
Dario Constantine is a senior associate at
Levitate Capital, where he focuses on drone
technology companies. He aims to invest in today’s
innovators who share Levitate’s vision for the
pivotal role uncrewed aerial vehicles will play in
the world over the next decade and beyond.
Before starting a career in venture capital, Dario
was a senior engineer at Maxar Technologies,
where he led the spacecraft configuration designs
of geostationary satellites.
Dario earned an MBA from the Stanford Graduate
School of Business, where he was an Arbuckle
Leadership Fellow, and a bachelor’s degree and
master’s degree in mechanical engineering from
Columbia University.
Email: dario@levitatecap.com
Dario Constantine is a senior associate at

Levitate Capital, where he focuses on drone
About Levitate Capital technology companies. He aims to invest in today’s
innovators who share Levitate’s vision for the
Levitate Capital
pivotal role uncrewedis aaerial
venture capitalwill
vehicles firm focused
play in
on next-generation air mobility.
the world over the next decade and beyond.
We see starting
Before the coming revolution
a career as one
in venture of theDario
capital,
profound transformations
was a senior of modern
engineer at Maxar society.
Technologies,
where he led the spacecraft
Our investments configuration
cover a broad designs
range of ventures
of geostationary
and new businesssatellites.
models that will complement our
aerial
Dario mobility
earned annetworks
MBA from of the
the future.
Stanford Graduate
School of Business, where he was an Arbuckle
Sign up forLeadership Fellow, and aat
our newsletter
Levitate Capital
bachelor’s degree and
is a venture engineering
capital firm focused
master’s degree in mechanical from
levitatecap.com
on next-generation
Columbia University.air mobility.
We see the coming revolution as one of the
profound transformations of modern society.
Email: dario@levitatecap.com
155
9 Acknowledgements
We thank the following contributors and reviewers for their
insights and input.
Kofi Asante Kirsten Bartok Touw Maximilian Boosfeld
Matt Broffman Carolyn Daughters Guillaume Delepine
Aaditya Devarakonda Dr. Roman Dudenhausen John Fernandez
Adam Grosser Tess Hatch Brian Hinman
Jon Lauckner Jim Martell David Merrill
Mark Moore Pasquale Romano Heidi Shyu
Joerg Sperling Duncan Walker
Levitate Portfolio Companies

156
10 Appendix A: Key Terms

Term Meaning Description
AAM Advanced Air Mobility New types of aircraft, airspace management systems, and other
technologies that enable the movement of goods and people
through the airspace.
ADS-B Automatic Dependent Surveillance technology that periodically broadcasts an aircraft’s

Surveillance-Broadcast position to enable it to be tracked by air traffic controllers and
pilots.
AEC Architecture, Sector of the construction industry that provides architectural

Engineering, and design, engineering design, and construction services.
Construction
BEI Built Environment Human-made structures, features, and facilities that provide the
Inspection setting for human activity.
BVLOS Beyond Visual Line of Ability for pilots of unmanned aerial vehicles to fly beyond visual
Sight range. This capability enables a drone to cover farther distances and
conduct complex operations without human interference.
CAGR Compound Annual A rate at which the market grows over a period of time if it had the
Growth Rate same growth rate each year.
CUAS Counter Uncrewed Also written as counter-UAS or counter-drone. These are systems
Aerial System for detecting or intercepting uncrewed aircraft.
DHS United States U.S. federal executive department responsible for public safety with
Department of missions involving anti-terrorism, border security, cyber security,
Homeland Security and disaster protection. Its function is comparable to the interior
ministries of other countries.
DoD United States U.S. federal executive department responsible for coordinating and
Department of Defense supervising all agencies and functions of the government directly
related to national security and the United States Armed Forces.
DoJ United States U.S. federal executive department responsible for enforcing the law
Department of Justice and administration of justice in the United States. Its function is
comparable to interior ministries of justice of other countries.
157

DoT United States U.S. federal executive department concerned with all forms of
Department of transportation within the United States.
Transportation
Drone Unmanned aerial “Drones” in this report exclusively refers to aircraft either
vehicles operated remotely or autonomously.
EASA European Union Agency of the European Union (EU) with powers to regulate
Aviation Safety Agency European civil aviation. It carries out certification, regulation and
standardization and also performs investigation and monitoring
over new type certificates and other design-related airworthiness
approvals for aircraft, engines, propellers and parts.
eVTOL Electric Vertical Aircraft that use electric propulsion to take off and land
Takeoff and Landing vertically. These aircraft promise to be quieter, safer, and less
expensive to manufacture and operate than a helicopter.
Additionally, these aircraft will likely include a degree of
autonomy.
FAA Federal Aviation Governmental body of the United States with powers to regulate
Administration all aspects of U.S. civil aviation as well as over its surrounding
international waters. Its powers include the construction and
operation of airports, air traffic management, the certification of
personnel and aircraft, and the protection of U.S. assets during
the launch or re-entry of commercial space vehicles.
HALE High-Altitude Long Unmanned aerial vehicle that flies at altitudes up to 60,000 ft
(UAV) Endurance (Unmanned (18,000 m) for periods up to 32 hours. Aircraft like the RQ-4
Aerial Vehicle) Global Hawk fall into this category.
IoT Internet of Things The network of physical objects embedded with sensors,
software, and other technologies in order to collect data from and
connect and exchange data with other devices and systems over
the Internet
LAANC Low Altitude Collaboration with the FAA and industry that provides drone
Authorization and pilots with access to controlled airspace at or below 400ft and
Notification Capability awareness of where pilots can and cannot fly. It also provides Air
Traffic Professionals with visibility into where and when drones
are operating.
MALE Medium-Altitude Long Unmanned aerial vehicle that flies at altitudes up to 30,000 ft
(UAV) Endurance (Unmanned (9,000 m) for periods up to 24 hours. Aircraft like the MQ-9
Aerial Vehicle) Reaper fall into this category.
158

MEA Middle East and Africa Countries that make up the Middle East and Africa.
Part-107 FAA commercial drone Guidelines set by the FAA for operators of commercial drones
guidelines less than 55 lbs.
Part-135 FAA Air Carrier and Guidelines and certification set by the FAA that either allows a
Operator Certification certificate holder to conduct interstate, foreign, or oversees
transportation throughout the U.S. (Air Carrier Certificate) or
within the same state in the U.S. (Operating Certificate).
Remote ID A digital license plate for drones that communicates
identification of a drone and its operator. Its expected rollout
in 2021 will make it the first UTM standard and a milestone
towards BVLOS and night time operations.
RoW Rest of the World Refers to all regions outside of the United States, Asia-Pacific,
Europe, and Middle East and Africa. Therefore, RoW primarily
consists of Canada and Latin America.
TAM Total Addressable Total opportunity size (revenue or user base) for a product or
Market service.
UAS/UAV Uncrewed Aerial Uncrewed Aerial System (UAS) refers to the aircraft, ground
System/ Unmanned control stations, communication systems, and other support
Aerial Vehicle equipment that enables an aircraft to fly without a pilot.
Uncrewed Aerial Vehicles, also referred to as “Drones,” are
aircraft without a pilot on board and are a component of UAS.
UTM Uncrewed Aircraft A traffic management ecosystem for low-altitude drone
Traffic Management operations that will identify services, roles and
responsibilities, information architecture, data exchange
protocols, software functions, infrastructure, and performance
requirements.
159
11 Appendix B: References
Defense References
1. Wall Street Journal: https://www.wsj.com/articles/for-u-s-military-drones-
airspace-is-growing-more-congested-dangerous-11562232600
2. Stockholm international Peace Research Institute:
https://www.sipri.org/media/press-release/2020/global-military-expenditure-
sees-largest-annual-increase-decade-says-sipri-reaching-1917-billion
3. CNBC: https://www.cnbc.com/2020/07/24/trump-allows-defense-contractors-
to-sell-more-armed-drones-to-foreign-militaries.html
4. Airforce Mag: https://www.airforcemag.com/abrupt-end-to-mq-9-production-
surprises-general-atomics/
5. Defense News: https://www.defensenews.com/global/mideast-
africa/2018/02/12/israel-air-force-says-seized-iranian-drone-is-a-knockoff-of-
us-sentinel/
6. National Interest: https://nationalinterest.org/blog/buzz/it%E2%80%99s-safe-
bet-us-air-force-buying-stealth-spy-drones-127767
7. Airforce Times: https://www.airforcetimes.com/news/your-air-
force/2019/03/08/air-force-offers-glimpse-of-new-stealthy-combat-drone-
during-first-flight/
8. Breaking Defense: https://breakingdefense.com/2020/09/uss-vinson-flies-f-
35s-quietly-readies-for-new-refueling-drone/
9. Aviation International News: https://www.ainonline.com/aviation-
news/defense/2020-07-17/project-mosquito-uks-loyal-wingman-program-
moves-ahead
10. National Interest: https://nationalinterest.org/blog/buzz/how-good-russias-
new-sukhoi-s-70-okhotnik-b-hunter-stealth-drone-105886
11. SUAS News: https://www.suasnews.com/2020/05/us-army-awards-
aerovironment-146-lmams-contract-funded-at-76-million-for-first-year-of-
switchblade-systems-procurement/
12. Global Newswire: https://www.globenewswire.com/news-
release/2020/02/17/1985804/0/en/Parrot-chosen-by-the-Swiss-Army-for-the-
supply-of-micro-drones.html
13. Skydio: https://www.skydio.com/pages/skydio-x2
14. ParrotUSA: https://www.parrot.com/us/drones/anafi-usa
15. Altavian: https://www.altavian.com/ion-m440
16. Teal Drones: https://tealdrones.com/suas-golden-eagle/
17. Vantage Robotics: https://vantagerobotics.com/vesper/
18. GSA Advantage: https://www.gsaadvantage.gov/
160
Defense References
19. Bard College Drone Center: https://dronecenter.bard.edu/files/2018/04/CSD-
Drone-Spending-FY19-Web-1.pdf
20. Congressional Budget Office: https://www.cbo.gov/system/files/2018-12/54657-
AirForceAviationFunding.pdf
21. Bard College Drone Center: https://dronecenter.bard.edu/drones-in-the-fy19-
defense-budget/
22. Boston Consulting Group: https://www.bcg.com/en-us/publications/2020/isr-
tech-disrupt-market-defense-drones
23. Bard College Drone Center: https://dronecenter.bard.edu/files/2018/02/CSD-
Counter-Drone-Systems-Report.pdf
24. Military.com: https://www.military.com/daily-news/2020/06/30/these-are-7-
anti-drone-weapons-us-military-plans-invest.html
25. Base Structure Report:
https://www.acq.osd.mil/eie/Downloads/BSI/Base%20Structure%20Report%2
0FY18.pdf
26. Global Diplomacy Index: https://globaldiplomacyindex.lowyinstitute.org
27. Congressional Budget Office: https://www.cbo.gov/system/files/2019-10/55685-
CBO-Navys-FY20-shipbuilding-plan.pdf
28. Fed Tech Magazine: https://fedtechmagazine.com/article/2018/09/how-
government-helped-spur-microchip-industry
29. NASA SBIR: https://sbir.nasa.gov/content/publications
30. Forbes: https://www.forbes.com/sites/jeremybogaisky/2020/07/01/anduril-
raises-200-million-to-fund-ambitious-plans-to-build-a-defense-tech-
giant/#f961c333c5e5
31. Federal Database:
https://www.fpds.gov/ezsearch/search.do?indexName=awardfull&templateNam
e=1.5.1&s=FPDS.GOV&q=anduril
161
Enterprise Overview References
1. Federal Aviation Administration:
https://www.faa.gov/news/fact_sheets/news_story.cfm?newsId=20516
https://www.faa.gov/data_research/aviation/aerospace_forecasts/media/Unma
nned_Aircraft_Systems.pdf
https://www.faa.gov/news/fact_sheets/news_story.cfm?newsId=22615
4. Civil Aviation Authority: https://www.caa.co.uk/Consumers/Unmanned-
aircraft/Recreational-drones/Recreational-drone-flights/
5. Civil Aviation Safety Authority: https://www.casa.gov.au/drones
Construction References
1. McKinsey & Company: https://www.mckinsey.com/industries/capital-projects-

and-infrastructure/our-insights/imagining-constructions-digital-future
2. Occupational Safety and Health Administration:
https://www.osha.gov/data/commonstats
3. Construction Connect: https://www.constructconnect.com/blog/high-cost-
construction-equipment-theft
4. The Atlantic:
https://www.theatlantic.com/politics/archive/2020/05/coronavirus-pandemic-
infrastructure-week/611125/]
5. Arabian Business: https://www.arabianbusiness.com/technology/448916-saudi-
arabia-to-turn-to-drones-to-re-start-construction-sector-says-falcon-eye-ceo
6. Bureau of Labor Statistics: https://www.bls.gov/oes/2018/may/oes119021.htm
162
Built Environment Inspection References
1. Progressive Rail Roading:

https://www.progressiverailroading.com/mow/article/Railroads-continue-to-
tap-drone-technology-to-inspect-track-bridges--57270
2. BNSF: https://www.bnsf.com/about-bnsf/financial-information/pdf/10k-llc-
2019.pdf
3. Union Pacific: https://www.up.com/investor/annual/
4. Progressive Rail Roading:
https://www.progressiverailroading.com/bnsf_railway/article/Inside-BNSFs-
advanced-drone-inspection-operation—57346
5. SUAS News: https://www.suasnews.com/2015/06/why-bnsf-railway-is-using-
drones-to-inspect-thousands-of-miles-of-rail-lines/
6. The Guardian: https://www.theguardian.com/cities/2019/feb/26/what-caused-
the-genoa-morandi-bridge-collapse-and-the-end-of-an-italian-national-myth
7. Infrastructure Report Card: https://www.infrastructurereportcard.org/cat-
item/bridges/
8. Transportation.gov: https://www.transportation.gov/testimony/highway-bridge-
inspections
9. AASHTO: https://aashtojournal.org/2019/05/24/aashto-survey-finds-drone-
use-exploding-among-state-dots/
10. George Mason University:
https://catsr.vse.gmu.edu/SYST490/490_2014_BI/BIS_FinalReport.pdf
11. SUAS News: https://www.suasnews.com/2020/10/ncdot-and-skydio-secure-
the-first-true-bvlos-waiver-under-part-107/
12. NY Times: https://www.nytimes.com/2019/03/08/realestate/the-building-
inspector-as-action-hero.html
13. Kittyhawk.io: https://kittyhawk.io/resources/case-studies/Travelers.pdf
14. State Farm: https://newsroom.statefarm.com/state-farm-gets-1st-national-faa-
waiver/
163
Agriculture References
1. Tevel-Tech: https://www.tevel-tech.com/
2. Science Direct:
https://www.sciencedirect.com/science/article/pii/S0305750X15002703
3. Financial Times: https://www.ft.com/content/afa5e042-4c50-11e9-bbc9-
6917dce3dc62
4. Asia.Nikkei: https://asia.nikkei.com/Business/China-tech/Teardown-of-DJI-
drone-reveals-secrets-of-its-competitive-pricing
5. National Agricultural Statistics Service:
https://www.nass.usda.gov/Publications/Todays_Reports/reports/fnlo0220.pdf
6. Producer: https://www.producer.com/2017/06/per-acre-equipment-calculation-
can-be-revealing/
7. Food and Agriculture Organization:
http://www.fao.org/fileadmin/templates/ess/documents/meetings_and_works
hops/APCAS23/documents_OCT10/APCAS-10-28_-Small_farmers.pdf
Enterprise Counter Drone References
1. Congressional Research Service: https://fas.org/sgp/crs/homesec/IF11550.pdf

2. CNBC: https://www.cnbc.com/2018/12/20/drone-sightings-shut-down-
britains-gatwick-airport.html
3. Today Online: https://www.todayonline.com/singapore/4-arrested-suspected-
drug-trafficking-using-drone-flew-between-kranji-and-jb
4. Airspace Mag: https://www.airspacemag.com/flight-today/narcodrones-
180974934/
5. The Verge: https://www.theverge.com/2017/6/18/15818224/drones-prisons-
smuggling-contraband
164
Oil & Gas References
1. All Africa: https://allafrica.com/stories/201911070020.html
2. Royal Dutch Shell: https://www.shell.us/energy-and-innovation/shale-gas-and-
oil/drone-development-permian-basin.html
3. Journal of Petroleum Technology: https://pubs.spe.org/en/jpt/jpt-article-
detail/?art=7576
4. SUAS News: https://www.suasnews.com/2020/08/nordic-unmanned-equinor-
deliver-to-offshore-oil-rig-troll-a/
5. International Energy Agency: https://www.iea.org/reports/methane-tracker-
2020/methane-from-oil-gas
6. Baker Hughes: https://investors.bakerhughes.com/news-releases/news-release-
details/baker-hughes-announces-june-2020-rig-counts
7. Offshore Technology: https://www.offshore-technology.com/comment/north-
america-has-the-highest-oil-and-gas-pipeline-length-globally
Real Estate References

1. National Association of Realtors:
https://www.nar.realtor/sites/default/files/documents/2019-real-estate-in-a-
digital-age-08-22-2019.pdf
2. Rismedia: http://rismedia.com/2016/12/20/drones-real-estate-marketing/
3. Real Trends: https://www.realtrends.com/blog/realtor-marketing-tools
4. National Association of Realtors: https://www.nar.realtor/research-and-
statistics/quick-real-estate-statistics
Utilities References
1. Fierce Wireless: https://www.fiercewireless.com/wireless/china-tower-counts-1-
95m-tower-sites-dwarfing-us-tower-sites
2. Forbes: https://www.forbes.com/sites/stephenmcbride1/2019/03/20/this-
stock-is-americas-5g-landlord-and-it-pays-a-3-8-dividend/#61e4a9056644
3. Wireless Estimator: http://wirelessestimator.com/content/industryinfo/312
4. Wall Street Journal: https://www.wsj.com/articles/pg-e-sparked-at-least-1-500-
california-fires-now-the-utility-faces-collapse-11547410768
5. Wall Street Journal: https://www.wsj.com/articles/california-utilities-hope-
drones-ai-will-lower-risk-of-future-wildfires-11599816601
6. Energy Information Administration:
https://www.eia.gov/todayinenergy/detail.php?id=40913
7. Bureau of Labor Statistics: https://www.bls.gov/oes/current/oes499051.htm
8. Royal Dutch Shell: https://www.shell.com/business-customers/lubricants-for-
business/sector-expertise/power-industry/wind-power/true-cost-of-wind-
turbine-maintenance.html
9. Next Era Energy: https://www.nexteraenergyresources.com/what-we-
do/wind/faqs.html
165
Mining References
1. National Mining Association: https://nma.org/wp-

content/uploads/2018/10/msha_number_operations_by_sector_2018.pdf
2. European Commission: https://ec.europa.eu/eurostat/statistics-
explained/index.php/Mining_and_quarrying_statistics_-
_NACE_Rev._2#Structural_profile
3. Drone DJ: https://dronedj.com/2019/08/01/bhp-saves-5-million-using-drones/
Professional Videography References

1. CNN: https://money.cnn.com/2014/06/23/media/drones-news-research/
https://www.faa.gov/uas/programs_partnerships/data_exchange/
3. IBJ: https://www.ibj.com/articles/63395-local-tv-news-stations-abandon-or-
reduce-use-of-pricey-choppers
4. Time: https://time.com/5295594/drones-hollywood-artists/
5. Deadline: https://deadline.com/2020/03/mpaa-annual-report-box-office-
worldwide-revenues-mobile-home-entertainment-1202879659/
6. Panasonic:
https://www.panasonic.com/global/corporate/ir/pdf/annual/2019/pana_ar201
9e_12.pdf
7. FilmLA: https://www.filmla.com/wp-
content/uploads/2020/01/2019_YTD_Local_production_days-WEB.pdf
166
Consumer References
1. The Verge: https://www.theverge.com/2019/9/3/20848383/dji-drones-price-
raises-trump-china-tariffs-trade-war
https://www.faa.gov/uas/resources/by_the_numbers/
3. MyLio: https://focus.mylio.com/tech-today/how-many-photos-will-be-taken-in-
2020
https://www.faa.gov/data_research/aviation/aerospace_forecasts/media/unma
nned_aircraft_systems.pdf
5. GoPro:
https://s21.q4cdn.com/291350743/files/doc_financials/2020/q2/Supplemental
-Slides.pdf
6. Nintendo: https://www.nintendo.co.jp/ir/en/finance/hard_soft/
7. McKinsey: https://www.mckinsey.com/business-functions/marketing-and-
sales/our-insights/a-global-view-of-how-consumer-behavior-is-changing-amid-
covid-19
8. Camera and Imaging Products Association: http://www.cipa.jp/stats/dc_e.html
9. Congress.gov: https://www.congress.gov/bill/116th-congress/senate-bill/2502
10. New York Times: https://www.nytimes.com/2020/07/23/us/politics/dji-
drones-security-vulnerability.html
11. Reuters: https://www.reuters.com/article/us-china-tech-dji-focus/chinese-
dronemaker-dji-makes-sweeping-cuts-in-long-march-reforms-idUSKCN25D0HF
12. Parrot: https://s3.eu-central-1.amazonaws.com/corporate.parrot.com/files/s3fs-
public/2019-03/Parrot_CP_T4-2018_20190315_EN_vDEF.pdf
167
Public Safety References
1. CNN: https://www.cnn.com/2020/07/08/asia/south-korea-drones-
trnd/index.html
2. DoJ: https://cops.usdoj.gov/RIC/Publications/cops-w0894-pub.pdf
3. NBC San Diego: https://www.nbcsandiego.com/news/local/chula-vista-pds-
drone-program-given-special-permission-by-faa-to-operate-in-low-
altitudes/2360811/
4. Bard College Drone Center: https://dronecenter.bard.edu/public-safety-drones-
update/
5. TechCrunch: https://techcrunch.com/2020/03/11/us-order-foreign-drones/
6. Vera Institute of Justice: https://www.vera.org/publications/what-policing-
costs-in-americas-biggest-cities
7. Axon:
https://s22.q4cdn.com/113350915/files/doc_downloads/gov_docs/annual/AAX
N-2019-Annual-Report.pdf
8. DroneDJ: https://dronedj.com/2020/04/07/daytona-beach-police-drones-
enforce-covide-19-park-closure/
9. Chula Vista PD: https://www.chulavistaca.gov/departments/police-
department/programs/uas-drone-program
10. San Diego PD:
https://www.sandiego.gov/sites/default/files/legacy/citycouncil/cd3/pdf/faqairs
upport.pdf
11. FireRescue1: https://www.firerescue1.com/emergency-response-in-the-drone-
age/articles/6-takeaways-on-how-fire-departments-are-using-drones-and-the-
barriers-preventing-purchase-CDQozj7OMa49hjHd/
12. FireApparatusMagazine:
https://www.fireapparatusmagazine.com/2018/10/01/fire-department-drones-
serve-a-variety-of-needs-on-incident-scenes/#gref
13. TechCrunch: https://techcrunch.com/2019/10/20/the-los-angeles-fire-
department-wants-more-drones/
168
Logistics References
1. UPS: https://www.ups.com/us/en/services/knowledge-
center/article.page?name=the-sky-is-the-limit-for-medical-
drones&kid=art169a5e96709
2. The Verge: https://www.theverge.com/2019/4/9/18301782/wing-drone-
delivery-google-alphabet-canberra-australia-public-launch
3. Washington Post:
https://www.washingtonpost.com/local/trafficandcommuting/virginia-town-
becomes-home-to-nations-first-drone-package-delivery-
service/2019/10/19/4b777d24-f1ff-11e9-89eb-ec56cd414732_story.html
4. CNBC: https://www.cnbc.com/2020/09/14/amazon-walmart-delivery-drone-
battle-escalates-with-zipline-deal.html
5. Fortune: https://fortune.com/2020/07/13/coronavirus-drones-dji-wing-flytrex-
covid-19-pandemic/
6. Business Insider: https://www.businessinsider.com/zipline-drones-deliver-
masks-for-coronavirus-doctors-2020-6#zipline-drones-operate-out-of-an-
emergency-drone-fulfillment-center-in-kannapolis-north-carolina-2
7. McKinsey & Company:
https://www.mckinsey.com/~/media/mckinsey/industries/travel%20transport
%20and%20logistics/our%20insights/how%20customer%20demands%20are%2
0reshaping%20last%20mile%20delivery/parcel_delivery_the_future_of_last_m
ile.ashx
Passenger References
1. CNBC: https://www.cnbc.com/2017/12/07/boeing-ceo-80-percent-of-people-
never-flown-for-us-that-means-growth.html
2. Reuters: https://www.reuters.com/article/us-airlines-safety-
worldwide/fatalities-on-commercial-passenger-aircraft-rise-in-2018-
idUSKCN1OW007
3. National Safety Council: https://injuryfacts.nsc.org/motor-vehicle/historical-
fatality-trends/deaths-and-rates/
4. Insurance Institute for Highway Safety: https://www.iihs.org/topics/fatality-
statistics/detail/state-by-state
5. SF Examiner: https://www.sfexaminer.com/news/with-traffic-on-the-rise-city-
looks-to-congestion-pricing-as-a-possible-fix/
6. Uber: https://s23.q4cdn.com/407969754/files/doc_financials/2019/ar/Uber-
Technologies-Inc-2019-Annual-Report.pdf
7. International Air Transport Association:
https://www.iata.org/contentassets/a686ff624550453e8bf0c9b3f7f0ab26/wats-
2019-mediakit.pdf
8. The Verge: https://www.theverge.com/2020/12/2/22086597/uber-sells-flying-
taxi-elevate-joby-aviation
9. CNN: https://www.cnn.com/2019/10/04/tech/uber-copter-review/index.html
169
Conclusion References
1. Drone Industry Insights; https://www.droneii.com/drone-autonomy
2. Forbes: https://www.forbes.com/sites/jeremybogaisky/2020/11/23/joby-
batteries-electric-aviation/?sh=4e84ef1776a7
3. Sandiego County:
https://www.sandiegocounty.gov/dplu/docs/081024/TM5499-NOISE-T.pdf
4. The conversation: https://theconversation.com/drones-to-deliver-incessant-
buzzing-noise-and-packages-116257
5. OSHA: https://www.osha.gov/Publications/laboratory/OSHAfactsheet-
laboratory-safety-noise.pdf
6. FAA: https://www.faa.gov/regulations_policies/policy_guidance/noise/history/
170
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What are the forecasts for the global drone market between 2020-2030?

What are the forecasts for the global drone market between 2020-2030?

What segments are expected to grow the fastest and be the largest in the drone market?

What segments are expected to grow the fastest and be the largest in the drone market?

The Future of the

A Report From Levitate Capital

1.1 Large Drones 11

1.2 Micro Drones 15

1.3 Defense Counter-Drone 19

2.2 Built Inspection 44

2.4 Enterprise Counter-Drone 62

2.5 Oil & Gas 69

2.6 Real Estate 76

2.9 Professional Videography 94

4 Public Safety 109

4.1 Police 111

4.2 Firefighting 118

6 Passenger Transportation 135

10 Appendix A: Key Terms 156

11 Appendix B: References 159

2020 2025 2030

Global Market Fastest Growth

The global drone Enterprise will

Largest Segment Largest Region

Defense will Asia-Pacific will

Market Forecast at a Glance

Defense Enterprise Consumer

2020 2025 2030 2020 2025 2030 2020 2025 2030

Public Safety Logistics Passenger

Geography Forecast at a Glance

Grey denotes countries where drones are banned.

Value of the drone economy

2 Factors influencing the drone economy

3 Strategies for success in the drone

2016 2017 2018 2019 2020

August: Released September: Rolled January: Required ADS-B

October: Granted UPS Flight

Roll out standards for drone Establish airworthiness Establish guidelines

2021 2022 2023 2024 2025 2026+

Roll out requirements Approve commercial drone Establish guidelines

Technology Development Timeline

Ubiquitous and improved

2021 2022 2023 2024 2025

Initial introductions of Battery energy density

Battery energy density

2026 2027 2028 2029 2030

Initial build-out of vertiport

Image from: FLIR; Black Hornet

Image from: Shield AI; Nova 2

U.S. defense spending on autonomous systems has increased by an average of 7.6%

Image from: Army Times; MQ-9 Reaper

1.1 Defense: Large Drones

Military spending by region from 2015- Top 10 military spenders in 2019

0 Japan 48 -0.1 2.5

1.1 Defense: Large Drones

Defense UAV exports between 2015 and 2019

Number of UAVs Exported Value of UAVs Exported

Image from: Shepardmedia; RQ-4 Global Hawk

1.1 Defense: Large Drones

Image from: Gordo News; Kratos XQ-58A