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Drone delivery startup Flirtey begins to commercialise its offering as it considers Series A funding

- May 6, 2015 7 MIN READ

Drone technology startup Flirtey was the world’s first ‘drone delivery service’ to ever launch. In 2013, the startup was met with scepticism and ridicule by a pretty large portion of the media – including the startup media and this publication. In a previous article, I questioned the company’s ability to legally operate drones in Australia. In fairness, the company, founded by Matthew Sweeny, Ahmed Haider and Tom Bass, largely existed off a working (very early) prototype and ‘drone delivery’ was a very new concept at the time.

While some may call early press premature, in retrospect, it probably helped the company forge the connections in the space it has today. It’s likely that consistent media mentions influenced Google and Amazon to begin talking about their own drone programs.

It was also around this time that Flirtey was going through Australia’s Startmate program, learning to become a laser-focused company that was sound in its mission to bring drone delivery technology to the masses.

The company’s strategy is to “develop scalable drone delivery technology,” according to Sweeny. “The [technology is being developed] in our US office and the commercialisation [side of our operation] has started in New Zealand as a test bed for our technology. And the way we see the commercialisation role now is through a series of drone delivery trials that increase incrementally in degree of complexity.”

The way Flirtey has began rolling out its commercialisation strategy is by starting operations over unpopulated areas, then slowly expanding across populated smaller sites and eventually cities. The startup has learned a lot from New Zealand that it will be able to take and use as part of its strategy to roll out drone delivery programs across the world.

After completing the Startmate program, Flirtey received a small amount of seed funding from BlackBird Ventures. Soon after that, it struck a major deal with the University of Nevada in Reno, a leading drone institute in the United States.

“As part of Startmate, we went on a tour to Silicon Valley and whilst we were there, the Federal Aviation Authority of the United States announced six drone test sites nationwide, none of them were in California, the nearest was in Nevada which was not far from where we were in Silicon Valley, so we came over to Reno,” said Sweeny.

“We’re the first company [outside the United States] that they’ve signed a deal with and they even brought us on campus and we’ve been able to hire top engineering talent and have got access to their indoor flight testing facilities”.

In fact, as I conducted the interview with Sweeny, I could hear faint sound of 3D printers in the background of the facility that were printing new design prototypes for the next generation of Flirtey’s drone design.

In addition to this major coup in Reno, the team at Flirtey has been able to build a number of other exciting partnerships. Flirtey is working with a professor from Georgetown University in Washington DC – a prestigious university yielding a lot of powerful alumni including Bill Clinton. This is undoubtedly placing Flirtey in a position to benefit from some of the first pre-approvals for drone delivery across the United States. The other partnership is with Virginia Tech, another of the six named sites that has been legally approved for drone testing.

After those partnerships were put in place, Flirtey was able to raise additional seed funding from a global syndicate of investors Nevada, Silicon Valley, New Zealand, Sydney and Melbourne, who are passionate about what the company is doing. Flirtey has even begun to have some preliminary discussions with NASA who is working on traffic control for drones. This potential partnership with NASA would add to this once ridiculed startup gaining a shitload more credibility points than it has garnered in the last 12 months.

Regulation of Drone Technology

Right now Flirtey has completed its second generation of its drone delivery platform, which can deliver 2.5kg over a distance of more than 12 kilometres, and are starting to tweak design elements to produce the next generation of drones. But creating a great product is just one part of the challenge. Drone technology is regulated and that will definitely have an effect on how fast Flirtey can scale across a global marketplace.

When searching the globe to identify the country with the most liberal drone regulations, Flirtey identified New Zealand as the clear winner. New Zealand has a really innovative regulatory environment across many industries; and Flirtey has been working closely with the country’s Civil Aviation Authority and Airways Corporations. In essence, the use of drones is legal in New Zealand at the moment, making it the best environment to conduct real-world testing.

In Europe, all signs indicate that the use of drones is not going to be made legal until 2016. In fact, Flirtey was recently asked to submit a proposal to parts of Eurpoean Governments around the frameworks of how drone delivery could work across their countries and the recommendations that came out of that proposal were to adopt the framework that Flirtey suggested – which was a risk-based approach to the regulation of drones.

Then there’s the United States; and based on how the FAA has been talking about drone technology, the best estimate is that it will start to become legal around 2017. There is a perception that Australia is also one of those countries that is behind when it comes to looking at drone technology. However, this is false.

Australia is actually quite ahead of the world having legalised commercial drones back in 2002, making it years ahead of the rest of the world in this space. It’s worth noting though that regulatory innovation has slowed down in this space over recent years. In Australia, there is a distinction between “hobbyists” and “commercial operators”; this plays a major role in adding roadblocks to companies like Flirtey being able to really do the testing they need. As such, New Zealand has been the best place to launch operations from. 

“New Zealand’s attitude is, it doesn’t necessarily matter if you’re a hobbyist or if you’re a commercial operator. What matters is how risky your drone operations are and what policies and procedures and technologies you have in place to mitigate that risk,” said Sweeny.

The likelihood of Australia catching up in terms of this type of regulation is high, especially as the European Union begins to roll out its framework next year.

One thing that’s becoming increasingly obvious about Flirtey is that, from both a design perspective and a regulatory knowledge point of view, it is years ahead of what could be perceived as its closest competitors – Google and Amazon.

For starters, Google has reportedly ‘canned’ a lot of the work they have done after trialling their “Project Wing” drones in Australia due to coming to a conclusion that the drone design was inadequate. Amazon, who on face-value, seem to be a little more serious about the space announced they were going to trial “Amazon Prime Air” in India. A few days after the announcement, the Indian Government said it was banning the use of commercial drones.

Flirtey’s strategy in working with government agencies to be part of the regulatory process is a strategy that has placed them in a more powerful position than other would-be major players in the space, something that should be getting far more attention than it is.

Transforming four main industries with drone technology

The vision at Flirtey is to transform four industries through the use of drone technology. Those industries are Humanitarian, Online Retail, Food and Courier Delivery.

Initial commercial drone trails in New Zealand were a success; one was with TradeMe, one of the country’s largest online retailers; and the other was with New Zealand Search and Rescue (LandSAR) where Flirtey demonstrated the company’s ability to deliver urgent medical supplies by drone.

“The thing we did, a delivery for two-way radios and first aid kits for NZ Land & Search Rescue, was at a location called Roxburgh on the South Islands. There’s a river running up between it so a human being physically couldn’t get access without going from car to foot, to boat to foot to get there. A drone just flies as crows fly and gets there within a couple of minutes, so in terms of scenarios where you have to deliver a defibrillator or a first aid kit or two-way radio or urgent medical supplies, I think that drones are uniquely placed to provide that urgent care,” says Sweeny.

When it comes to food, Sweeny revealed to Startup Daily that Flirtey has just signed a deal with a fast food company in New Zealand, although due to a confidentiality agreement, was unable to reveal the name of the company. Essentially, this means that Flirtey drones will start being used to deliver food items like burgers, fries and a coke from stores to customers in the local areas surrounding those stores. The roll-out will start in suburban areas before being available in cities – most likely because drop-offs will be easier to do at houses than apartment buildings at this stage.

The business model that Flirtey operates on is by selling itself as a “drone delivery service” for the four above-mentioned industries. It is not the company’s intention to sell drones; in fact, I couldn’t imagine too many companies wanting to do that at all, especially because there would be insurance and maintenance costs that would be well above what business owners would be willing to invest.

The startup thus provides drone delivery as a service on behalf of customers and manage the chain of events that go along with it, from picking up the package to delivering the package. While the drones are autonomous and run missions based on GPS, there is always a human operator in the loop from a central Flirtey control point. 

When it comes to the courier delivery industry, Flirtey’s view is that drone delivery technology could be the next solution for postal organisations in Australia and around the world. It would certainly allow them to introduce a faster service to people who may want their letters or packages urgently for a premium cost.

Given Temando is a major player in the delivery space – Neopost invested $50 million into the company recently – and is an investor in Flirtey, I believe there will be some major developments that will happen in this space. This is also because New Zealand Post is one of the most innovative postal services in the world, and because Neopost is so heavily influential as a company across Europe.

In addition to its commercial testing efforts, Flirtey is also in the early stages of looking at a new investment round to help it keep up with its growth plans and compete on the world stage. The iteration of product and investor talks will most likely happen in parallel.

“We haven’t disclosed exact numbers on what we are looking for,” said Sweeny. “But when you look at the hottest drone startups in Silicon Valley, they’re raising Series A rounds of around the $10 million mark.”

Then, of course, there are other companies like Skycatch which also closed a $13.5 million Series A not too long ago. The advantage that Flirtey has above many of its other Silicon Valley competitors is it has signed customers. Without an extraordinary amount of funding, it has been able move beyond theory and testing to using the technology as a real-world application.

“I think that Flirtey and drone delivery technology is going to be transformative because not only will it save lives but it will transform lifestyles. I think we’re at a point on the technology curve where this is just starting to become ubiquitous and I think that Flirtey is in a very exciting place to lead the world in that charge,” said Sweeny.

Featured image: Matt Sweeny, Co-Founder, Flirtey.