Airware
The start-up building a drone operating system and data platform for enterprises
- Founded
- 2011
- Closed
- 2018
- Lifespan
- 7 years
- Total funding
- $118 million
- Country
- United States
- City
- San Francisco
- Sector
- Hardware
- Founders
- Jonathan Downey
- Investors
- Andreessen Horowitz, GV, Kleiner Perkins, Next World Capital, John Chambers
- At its peak
- 140 employees at its peak
- Cause of closure
- Lost to competitors
What did it do?
Airware developed hardware, software and cloud services that let businesses collect and analyse aerial data using drones. Sectors such as construction, mining and insurance could measure roof damage, mine output or site progress with a drone instead of a helicopter or scaffolding.
Why did it shut down?
Because the drones on the market could not produce the data it needed, the company set out to design its own hardware, but once DJI's and eBee's products caught up those projects were shelved. Over time the software bundled with other manufacturers' drones became good enough, and Airware's edge narrowed. The company switched to a consulting-led model, but layoffs followed one after another in its last two years. According to the company, the market matured later than expected and the cash ran out while the necessary transformations were under way. Airware ceased operations on 14 September 2018.
The story
On the morning of 14 September 2018 Airware employees learned that the company would cease operations that same day. The decision came so suddenly that only four days earlier the company had opened an office in Tokyo with investment and a partnership from Mitsubishi.
Jonathan Downey founded Airware in 2011 in Newport Beach, California, frustrated by how inflexible and expensive existing autopilot systems for drones were. The company first developed an autopilot and operating system that let drones collect data by following set routes, and moved to San Francisco in January 2014. Its target customers were insurers measuring roof damage, mining sites and construction sites. It raised a total of $118 million from investors such as Andreessen Horowitz, GV and Kleiner Perkins; former Cisco CEO John Chambers also joined the $30 million Series C in March 2016. In 2015 Airware set up a fund investing in commercial drone start-ups, and in 2016 it acquired the drone analytics company Redbird; its headcount at one point reached 140.
The problem was that Airware was running ahead of the market. According to a former employee who spoke to TechCrunch, because the drones on the market could not produce data in the detail the company's software needed, Airware designed two drones itself, one multi-rotor and one fixed-wing. When DJI's and eBee's hardware caught up with requirements, both projects were shelved; what remained was spent engineering time and manufacturing costs. Over time the software that came with other manufacturers' drones also became good enough, and Airware's edge melted away. The company turned to advising customers on drone use, but layoffs followed one after another in its last two years.
The company's closing statement summed up the situation in one sentence: the market had matured “more slowly than we anticipated”, and the financial runway ran out while the necessary transformations were under way. Its remaining assets were bought by Delair, a French drone maker based in Toulouse.
The lesson of Airware is that arriving early can be an expensive burden as well as an advantage. If you try to fill an infrastructure gap on your own, your investment can lose its value overnight once a big player fills that gap.
Lessons for founders
- If you are a software company, assess whether the hardware on the market will catch up within a year or two before you start building hardware yourself.
- If you compete with software that big manufacturers give away free, build a layer that sells customers a measurable business outcome.
- Plan for the time a market takes to mature on a pessimistic rather than an optimistic scenario, and set your cash runway accordingly.
Sources
- Airware (Wikipedia)
- Drone startup Airware crashes, will shut down after burning $118M (TechCrunch, 2018-09-14)
- Drone Startup Airware Raises $30 Million, Adds Cisco's John Chambers To Board (Forbes, 2016-03-31)
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