We must vow to think beyond “drones” and study the business problems and drone-specific solutions required to solve them.
The enterprise successes so far have largely benefited from first-mover advantage, and now face increasing competition from new entrants providing incrementally better solutions at slightly lower prices. We expect that solution providers will now defend their early customers through expanding their value propositions and outsourcing non-critical drone functions, including hardware, to the lowest bidder.
Technologies or business models need a place in the stack. Hardware and software startups have grabbed market share as the drone stack has emerged. It is important to note, as certain players broaden their reach up and down the drone stack, a true technological or business breakthrough must provide a step-function improvement over the status quo. An increasing number of these solutions are being absorbed by adjacent players, as developing it themselves is trivial. Deeper tech is harder to plug-and-play, due to the tight integration required, than the component companies will indicate to a prospective investor.
Platform effect. Not only must a solution provider provide a core solution or service, it must solidify its place in the drone tech stack. This requires other technology (hardware, middleware and software providers) to build on all sides of the solution, and a structure where each additional client brings more value to
Drones hold promise to be a truly enabling technology supporting a variety of crucial global industries. The drone-first solutions to problems both known and to be discovered are foundationally solid, efficient and effective. The supporting web of hardware, middleware and software is now substantially robust enough to provide significant value to certain enterprises.
As enterprise investors, we consider the broader business opportunity where drones and the technology drive change within large organizations, and aim to observe the drone “sector” though a wider lens. As with any enterprise investment, we embrace the specific problem a company is solving, who is going to pay for it and why it is the most effective solution.