Middle East: Could Region Become Primary Source of Funding for eVTOL Startups?

As con­cerns grow over eVTOL start­up fund­ing, ainonline.com, wrote last week that Volo­copter recent­ly said in a short writ­ten state­ment, it is secur­ing suf­fi­cient finances from a num­ber of exist­ing, but undis­closed share­hold­ers, to bring its VoloC­i­ty to full cer­ti­fi­ca­tion. The amount being raised is also not men­tioned.

Wor­ries over the huge amounts of mon­ey need­ed to bring a new eVTOL or VTOL air­craft to the com­mer­cial mar­ket, con­stant­ly weighs on the indus­try, espe­cial­ly when some media pun­dits sug­gest USD1 bil­lion invest­ment is a bare min­i­mum require­ment.

Lil­i­um, Ver­ti­cal Aero­space, Volo­copter and oth­ers remain vul­ner­a­ble. Per­haps, only Archer, Joby and EHang have suf­fi­cient poten­tial back­ing along­side Aut­oFlight, Eve Air Mobil­i­ty and Super­nal. And why this recent news from Volo­copter has cheered the mar­ket. 

Accord­ing to a spokesper­son, AIN writes, “The com­pa­ny does not expect to be able to say more about its finan­cial sit­u­a­tion until a fund­ing round clos­es in Q4 of this year. The state­ment indi­cates the com­pa­ny has suf­fi­cient mon­ey to com­plete Type Cer­ti­fi­ca­tion of its two-seat VoloC­i­ty, which it now expects to achieve with EASA by the end of this year.”

Fly­ing Taxis to Take Off at Paris Olympics? “The Silence is Deaf­en­ing”

The major dis­ap­point­ment that this elec­tric air taxi won’t be fly­ing ath­letes and the pub­lic to and from the dif­fer­ent sports sta­dia at the Paris Olympics dur­ing July/August, as first promised, has been a blow to not just the com­pa­ny, but the indus­try as a whole. This would have been fan­tas­tic pub­lic­i­ty to kick­start the green avi­a­tion rev­o­lu­tion. While, the com­pa­ny remains hope­ful it may yet con­duct flight (non-pas­sen­ger) demon­stra­tions under some form of spe­cial EASA dis­pen­sa­tion, the once expect­ed blaze of pub­lic­i­ty may not mate­ri­alise.

Volocopter’s recent fund­ing prob­lems began in April, when a stand­off between the Ger­man fed­er­al gov­ern­ment and Bavar­i­an state politi­cians stalled an agree­ment over loan guar­an­tees. A few weeks lat­er, Bavaria-based Lil­i­um, also seek­ing new fund­ing at the same time, report­ed that the due dili­gence process for new sources of financ­ing had begun. How­ev­er, Volo­copter, based in the state of Baden-Würt­tem­berg, was not so lucky and is seem­ing­ly look­ing for alter­na­tive finan­cial investors. So, what is the solu­tion to this prick­ly prob­lem?

Robin Riedel, who co-leads con­sult­ing group, McKinsey’s Cen­tre for Future Mobil­i­ty, told AIN, “The AAM sec­tor is at that dif­fi­cult pre-rev­enue phase, when com­pa­nies are gen­er­al­ly too small to attract pri­vate equi­ty mon­ey and too big for ear­ly ven­ture sup­port.”

Riedel sug­gests Volo­copter may seek new back­ing from the Sau­di Ara­bi­an NEOM Region­al Devel­op­ment Project. In Novem­ber 2022, NEOM sup­port­ed the com­pa­ny’s Series E Fund­ing Round, along­side Hong Kong’s GLy Cap­i­tal Man­age­ment. 

NEOM and Volo­copter launch first elec­tric air taxi flight in Sau­di Ara­bia

In Riedel’s view, gov­ern­ments and com­pa­nies in the Gulf region are increas­ing­ly posi­tion­ing them­selves to sup­port the ear­ly com­mer­cial use cas­es for eVTOL air­craft such as those being pro­duced by Archer, Joby and EHang.

Giv­en the Mid­dle East’s deter­mi­na­tion to become the ear­ly lead­ers of green avi­a­tion, it makes per­fect sense that the region may not only finan­cial­ly sup­port cer­tain fly­ing taxi star­tups, but ver­ti­port devel­op­ers too.

Robin Riedel

An obvi­ous exam­ple is Abu Dhabi’s new Smart & Autonomous Vehi­cles Indus­try (SAVI) clus­ter, locat­ed in Mas­dar City. Back in Octo­ber, the UAE cap­i­tal signed agree­ments with 25 inter­na­tion­al firms, rang­ing from autonomous vehi­cle spe­cial­ists and eVTOL firms to under­wa­ter drone inno­va­tors.

https://www.savi.ae

Less­er known mem­bers like Italy’s hybrid elec­tric Man­ta Air­craft and France’s Ascen­dance Tech­nolo­gies prob­a­bly have a bet­ter chance of attract­ing the nec­es­sary finances than oth­er star­tups not involved in the Mid­dle East.

For more infor­ma­tion

https://www.volocopter.com/en

https://www.ascendance-ft.com

https://www.mantaaircraft.com

(News Source: www.ainonline.com)

(Top image: Volo­copter)

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