US drone operator Zipline doubles valuation to $2.75bn

Zipline, the world’s only drone delivery service operating at scale, has raised $250m and more than doubled its valuation to $2.75bn as it seeks to keep up with demand unleashed during the pandemic.

Founded in 2014, the California-headquartered start-up has made its name in Africa by supplying hospitals with blood, medicine and vaccines, completing more than 150,000 missions in the past five years.

Now it is in the process of expanding its operations in the US, with partners such as Walmart, Pfizer and Novant Health, and in Japan at the urging of Toyota, one of its investors.

Chief executive Keller Rinaudo said that Zipline had tripled its bookings goal last year as global health systems suffered from supply shortages and sought to keep operations steady amid social distancing regulations.

“Suddenly, the need for instant logistics is incredibly apparent to every health system owner,” he added.

The US drone market is heavily regulated by the Federal Aviation Administration, but Rinaudo said that after two years of negotiations, he expected to receive a permit this year to begin wider operations for its long-distance, unmanned delivery service.

“We are now on the one-yard line,” he said. “It’s super exciting that the FAA is committed to this and working as hard as they are to make sure that the US doesn’t fall behind in this fundamental new area of technology.”

Rinaudo was speaking from Zipline’s HQ near San Francisco’s airport, where the company builds all of its drones. Today it has more than 1,000 such aircraft in daily operation.

“We manufacture it here and then we operate nine global distribution centres serving about 25m people,” Rinaudo said. “We deliver, every day, to 2,500 hospitals and health facilities across Rwanda, Ghana and the United States — and we’re adding Nigeria and Japan in the next couple of months.”

Zipline’s success is all the more notable given the lack of any real traction at commercial operations from Silicon Valley’s tech giants, including Amazon and Alphabet, whose focus has been on the short-distance delivery of consumer goods.

By contrast, Zipline claims to have helped save 15,000 lives last year alone. It delivers three-quarters of Rwanda’s national blood supply, fulfilling orders within minutes and travelling more than 100km to rural hospitals.

“A lot of people see this and say, ‘oh, this is useful in Africa because there are no roads and no regulations’,” Rinaudo said. “But that’s definitely not true. There are good roads to all the health facilities that we serve and the regulatory climate is very similar to the US. The difference is just that certain countries are moving faster and adopting new technology.”

Deloitte projects that in the US alone, the advanced air mobility market — comprising the low-cost airborne movement of goods and people — will be a $115bn industry by 2035, employing 280,000 people.

Among Zipline’s new investors are Fidelity, Intercorp, Emerging Capital Partners and Reinvent Capital. They join existing investors such as Baillie Gifford, Temasek and Katalyst Ventures. 

Bryce Fort, managing director at ECP, said Zipline had shown “the effectiveness of a system that can, ultimately, materially improve a wide range of logistics challenges globally”.