Drone Delivery Startup Poised to Expand U.S. Operations With New Funding

(Bloomberg) --

Israeli drone delivery start-up Flytrex says it has raised $8 million to help fund the expansion of its U.S. operations, bringing its total fundraising to date to more than $20 million. Flytrex founder and CEO Yariv Bash said on Monday that the latest funding is part of a larger round he plans to close later this year. Most of this $8 million comes from previous backers, including Palo Alto-based Benhamou Global Ventures and European venture fund Btov.

“We’re getting ready for when we have nationwide approval for drone deliveries,” said Bash. “That's going to be both crazy and amazing.”

Last September, Walmart announced plans to use Flytrex drones to make deliveries as part of a pilot program in Fayetteville, North Carolina. So far, the service is mostly a proof of concept, with drones carrying orders from a local Walmart, as well as a Starbucks and a Japanese restaurant in the same strip mall, to several dozen backyards in the area as well as to a public pick-up spot in a nearby field. Flytrex aims to expand the service in Fayetteville and beyond, allowing retailers at suburban shopping centers across the country to deliver smartphones, clothes and other items directly to customers’ homes within minutes. For that, it will need approval from the Federal Aviation Administration.

Last year, before the Fayetteville service began operating under a limited waiver, Flytrex and its partner, private charter company Causey Aviation, applied to the FAA to be recognized as an unmanned air carrier. The application is awaiting approval. For now, Alphabet Inc.’s Wing, United Parcel Service Inc. and Amazon.com Inc.’s Prime Air remain the only FAA-sanctioned drone delivery operators. Bash said that Flytrex is seeking more expansive permissions than anything the FAA has granted to date. “We have asked for approval to fly above actual neighborhoods and to have multiple drones per operator,” said Bash, “which is something that they haven't approved yet, so it can take a bit longer.” Once the approval comes through, he said, Flytrex will begin racing to deploy in more markets.

Bijan Vasigh, a professor of economics at Embry-Riddle Aeronautical University, cautioned that it will likely be years before delivery drones begin filling U.S. skies. “There are many issues that the drone industry has not resolved,” said Vasigh, who lists weather limitations, privacy, security, and insurance among the sticking points. Still, Vasigh expects drone delivery will eventually become commonplace. The potential savings in labor and fuel costs, as well as delivery times, he said, are too great to be denied. 

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