Democratising air cargo and accelerating e-commerce in emerging markets - Interview with Svilen Rangelov, founder of Dronamics.
DRONAMICS is innovating freight transport through same-day drone delivery.
As CEO, Svilen Rangelov leads DRONAMICS' business team in the development of 'The Black Swan' drone - a fixed-wing aircraft capable of transporting 350 kg over a distance of 2,500 km. In 2014, he co-founded DRONAMICS with his brother Konstantin, an aerospace engineer, with the goal of leveraging advances in autonomy, aerodynamics and manufacturing to democratise air cargo and accelerate e-commerce in emerging markets.
What is the story behind Dronamics?
The idea for Black Swan was born one day when my brother and co-founder Konstantin was in the Netherlands and asked me when I would visit him again so I could bring him some Bulgarian cheese. I answered him that I will not be visiting him anytime soon, and since he is the engineer - why not invent a drone that can deliver it for him. At the time, small drones for hobby use were all the rage, and even on the commercial side, giants like Amazon were entering the field to deliver the last mile. So we wondered: why is not anyone addressing the middle mile problem? After all, there are fewer regulatory hurdles and less public acceptance here, and the technology for larger planes is already widely known and validated.
We took a closer look and found that there is a huge unmet need here - current aviation does not provide a solution for connecting tier 2, 3 and beyond cities. We also found that there is a lot of economic research that shows that improving the supply chain is the best thing a developing country can do. No other policy or economic measure - tax cuts, tariff elimination, privatization - none of the usual tools economists use can have as positive an impact on a country's economy as improving its supply chain. And that's when we realized the true power of this technology - it enables a more even geographic distribution of economic opportunity.
Our first investor was Bulgarian startup accelerator Eleven, and when we were accepted into their program, my brother and I decided not to shave our beards until we had built an aircraft that could autonomously transport large payloads, and so now we have these horrible 7-year-old beards - we hate beards! Fortunately, we are very close now. We have built a team of more than 90 people working in different locations, not only in Bulgaria where our main research and production facility is located. After years of developing and testing several smaller prototypes of the drone, we are in the final stages of assembling the first full-size Black Swan aircraft, which should be completed later this year - just in time to get shaving stuff as a Christmas present once again!
What problem does Dronamics solve and how would you say it eases your customers' "pain"?
With the rise of e-commerce, consumers are more and more trained to expect faster and faster delivery - next day delivery is now the norm, so the next frontier is same day delivery. Especially in the context of the global pandemic, we are seeing how volatile global supply chains can be, and with the number of closed borders, the ability to send point-to-point deliveries quickly by air has led to an increase in demand for air freight. Current modes of transport are predominantly tied to the ground, where significant investment in infrastructure is required to open up new trade routes.
Air freight - a relatively new kid on the block Air freight accounts for only 1% of trade volumes because it is 5-7 times more expensive than road transport. We are in the process of creating a network that can transport at the cost of road transport and at the speed of air transport, opening up aviation to the 99% of trade that does not currently fly. However, the potential applications of long-range drone logistics go beyond e-commerce to include applications such as delivering medical supplies to hard-to-reach locations in emerging markets where ground transportation is not always an option. With fulfillment being the only real differentiator, any e-tailer or marketplace that offers the speed of the air at the cost of the ground has a huge advantage.
Who is your platform most useful to? Who are your customers?
We made it our mission to build an aircraft from the ground up that serves a single purpose - shipping to different regions quickly and affordably. And so we started building the Black Swan, our express delivery vehicle in the sky.
With a payload of 350 kg and a range of 2500 km, the Black Swan is the express delivery vehicle in the air. Similar to data transmission, we break down the large chunks or cargo quantities into small units of a delivery truck that we can ship.
To exploit the market potential, we have developed an extremely scalable business model based on network effects. We will operate the network and sell cargo capacity to customers rather than individual aircraft. The flying express courier truck in the sky is an entirely new mode of transport that offers the speed of air transport at the cost of road transport and could disrupt supply chain models by starting with time-sensitive goods.
At the end of the day, we are a B2B company developing routes for customers like Hellmann Logistics and DHL, with whom we have extensive partnership agreements, and we sell capacity on the routes we serve with our aircraft. Some other industries we are well suited for are e-commerce, pharma and spare parts shipping.
What is happening in the industry you operate in? What are the key trends?
In a recent study on the future of the drone economy, the current drone market is estimated at $15 billion, with recreational and military drones being the most important segments. Despite the huge hype around advanced air mobility and air taxis, the first logical step into unmanned aviation is cargo, where the risk in the air and on the ground is much lower. Therefore, we believe that unmanned air cargo will be the necessary stepping stone for future autonomous airspace. In fact, most analysts estimate that cargo will be the fastest-growing segment in the drone economy, with an estimated market value of $47 billion by 2030. At the same time, regulations have recently opened up to companies like ours - so the race for large drones for civilian purposes has begun. Fortunately for us, we have been developing our platform to market readiness for years, and today is an important milestone in our quest to become the world's first and best cargo drone airline.
Startups grow from failure. Have you ever had to change your product or service to better meet the needs of your customers?
I would not say we have had to reorient ourselves in the usual sense, we have taken more of a detour. From the beginning, we developed the Black Swan concept as a solution for everyone, everywhere. This means that it is affordable and cost-effective enough to be relevant to exactly the kind of emerging markets where roads are poor or non-existent and where economic activity is held back by poor connectivity. With the adoption of uniform drone rules in Europe earlier this year, we had a clear path to permission to fly and certification by a well-known and respected regulator, and there are also tens of millions of people in Europe who live in remote or poorly connected areas. So if we launch the service in Europe and Australia first, along with a very comprehensive regulatory framework, that would pave the way for us into emerging markets by leveraging our expertise from our initial operations in Europe and Australia.
Where do you see Dronamics and your company in 3-5 years? Do you have a possible exit scenario in mind?
Given current customer and investor interest, our goal is to become a leading aircraft manufacturer and operator in terms of the number of aircraft built and operated. We want to democratize air cargo as we know it by building smaller aircraft at a scale that can be easily deployed and operated in any region. Even if we cover the estimated capacity needed for our customer pipeline, there are expected to be at least 4,000 of our aircraft in the skies by 2030, which is an order of magnitude more than some of the largest airlines. We see the potential to build DRONAMICS into a globally recognized brand that could eventually be listed as a public company on a major stock exchange.
You are currently in the process of listing Dronamics on the Bulgarian Stock Exchange. What is the difference between the campaign there and the campaign on SeedBlink for investors?
The Bulgarian Stock Exchange has set up a special market for startups called BEAM, which allows companies like ours to raise up to 3 million euros. Following the great success of SPV IPOs of urban air mobility startups in the US, we are leveraging this model locally by listing a Bulgarian SPV called DRONAMICS Capital, which would invest in DRONAMICS with a SAFE note, similar to the investors on SeedBlink. However, the SPV on BEAM will receive a modified SAFE that will be converted into ordinary shares, while SeedBlink's SAFE will be the standard note that will be converted into preferred shares.
What makes Dronamics so special? Why should investors choose you?
We are uniquely positioned to operate the world's first cargo drone airline that would revolutionize the logistics we are familiar with by offering same-day delivery service on every continent. We are in the final days before the unveiling of our first full-size Black Swan aircraft and are just a few months away from flight approval and first flights. By investing today through SeedBlink, you have the opportunity to help us with our mission at this critical moment, just before we reach our most important milestones when we will be able to scale our team and operations in multiple regions and raise funds for our Series A. We welcome you to join us in our mission to democratize air freight and make same-day shipping possible for anyone, anywhere!
By Bianca Iulia Simion
PublishedNovember 29, 2021