US drone operator Zipline raises $250m to expand operations in Africa

Drone delivery start-up Zipline  announced on Wednesday that it has raised $250m to expand its operations in Africa and the US. The funding follows a surge in demand for Zipline’s services in Ghana and Rwanda, where it delivers medicine and other supplies to rural hospitals and clinics.

As traditional supply chains broke down during the pandemic, many healthcare providers relied on the company’s drones to fill the gaps, according to Zipline co-founder and CEO  Keller Rinaudo.

“Covid has significantly accelerated all of our timelines,” said Rinaudo. “As more and more health systems were betting on us, we were realising that the opportunity is bigger and we need to be making big investments.”

Zipline plans to use the new funds to build more hubs and warehouses in Africa, including in Nigeria, as well as to make inroads in the US, where it ran a pilot programme delivering to a pair of health facilities in North Carolina in 2020.

Investors in the round, which values Zipline at $2.75bn, include Scottish investment firm Baillie Gifford, Fidelity Investments, and Singapore’s state-owned fund Temasek. Zipline has raised $486m to date.

“Of all the start-ups that we have seen in this space,” said Aftab Mathur, director of innovation investments at Temasek, “they are the folks that are actually thinking about it the way a large tech company would.”

Where the others tend to focus only on the hardware design, said Mathur, Zipline has also built its own assembly plant, air traffic management software and distribution centres. 

Zipline began serving its first hospital in Rwanda in 2016. Its fleet of hundreds of fixed-wing drones now makes deliveries to more than 2,500 sites, all but a few in Africa. The company expects to reach 6,000 locations by the end of this year.

Orders for traditional vaccines and other medicines have grown tenfold since the pandemic began, according to Rinaudo. In June, when President Joe Biden announced that the US planned to buy 500-million doses of Pfizer’s coronavirus vaccine to share internationally, Pfizer said it would work with Zipline to deliver doses to hard to reach areas.

Over the past five years, the San Francisco-based company has flown 16-million kilometres and made more than 150,000 deliveries. Its drones launch from catapults and cruise at altitudes of up to 150m, navigating autonomously by satellite and dropping their payloads, a few pounds at a time, by parachute. They can cover up a 160km round-trip and serve up to 13,000km² from a single hub. 

Zipline next plans to take on direct-to-consumer delivery, as well as to scale its operations in the US, where the Federal Aviation Administration (FAA) is still working on the rules for unmanned flight.

The company, Rinaudo said, expects to begin serving more US hospital networks later in 2021. Last September, Walmart announced a partnership with Zipline to test drone delivery for medicines and other health products to homes in Northwest Arkansas. “Our hope is to get to most states in the US and most homes over the coming years,” said Rinaudo. 

Backyard delivery is the holy grail for the drone industry — the application would allow the technology to disrupt the multibillion-dollar last-mile delivery market.

Zipline will be up against efforts backed by Alphabet, Amazon.com and United Parcel Service, whose operations already have been certified by the FAA as unmanned air carriers. While Zipline has yet to attain this status, it stands apart from its larger competitors as the only company already making tens of thousands of deliveries every month.

“People have a hard time differentiating what Zipline does from a company that might be building a quadcopter,” Rinaudo said, “and might deliver once by duct taping a Snickers bar to the bottom of it.”

Bloomberg News. More stories like this are available on bloomberg.com