- The drone market is one of the most exciting, and fastest growing, within the industrial sector. Estimates are that there will be a $100bn market opportunity for drones between now and 2020. In 2017 alone, $200m of investment was directed towards drone businesses in the early stages of their life cycle as venture capitalists raced to acquire a stake in the high growth market.
Drones have progressed from their origins in the military into the consumer market and are now exploding into the commercial market. The military represents the most mature drone end market and still comprises 70% of the total market. However, commercial uses are the fastest growing and despite only accounting for 13% of the drone market currently, they are expected to dominate it in the future.
- In the commercial sector, drones are changing the way businesses operate. Their capacity for generating large amounts of data through inspection, surveying and mapping applications in a cost effective way is revolutionising industries and, in particular, infrastructure/construction, agriculture and insurance.
- In infrastructure/construction, drones are being used to inspect and survey sites, issue progress reports, locate defects and drive safety improvements;
- In agriculture, aerial surveillance drones are being used for more regular crop supervision, soil mapping, field analysis, irrigation optimisation and yield optimisation; and
- In insurance, drone data is being used for risk monitoring and risk assessment purposes, which enables a more precise calculation of risk before determining a premium and issuing a policy.
The rapid growth in commercial uses for drones is expected to open the flood gates in terms of M&A activity as vertical integrators vie to consolidate the industry and horizontal integrators seek to buy capability. This is especially true in the UK, where significant investment in drones will drive a competitive M&A landscape. The UK is expected to account for 10% of drone spending between 2017 and 2021, making it a market leader alongside the US, China, Russia and Australia.
M&A activity in the UK to date has been limited but there are a number of rapidly growing and privately held drone innovators that are attractive acquisitions targets. Elsewhere, M&A activity has ramped up more quickly. In Europe, Intel has acquired two Germany-based drone businesses, MAVinci and Ascending Technologies; meanwhile, GoPro acquired the Swiss drone sensor manufacturer, Skybotix, and Airwave acquired French drone analytics provider, Red Bird. The US has seen the most prolific drone M&A activity, with Ctrl Me Robotics acquired by Snap, Skyward acquired by Verizon and Liquid Robotics acquired by Boeing.