At the risk of stating the obvious, the very industry of venture capital is about investors taking a chance on companies, industries and markets that are not yet fully developed. That’s because true value creation — the kind of billion dollar-plus businesses — takes time, unbelievable effort, and more than a little good fortune. We are investing on the potential of a market or solution, in most times years before the business will have a scalable product. Sometimes, that means we pick companies with potential for long-term global impact or in companies with a bleeding-edge product that will be a catalyst for making a currently niche market a mass market one. We also invest in a phenomenal founder with the proverbial “unfair advantage” in a category, even if all they have is an idea or an early working prototype.
In any of these scenarios, investing for long-term disruption is a
valid investing thesis and as a firm, Upfront Ventures has frequently invested in companies with huge potential to disrupt global issues in the long term (for example, Apeel Sciences has the potential to revolutionize agriculture, and ThredUp is changing the way fashion and apparel is consumed and reused). I see tremendous merit in this for both societal and financial reasons.
However, I find myself consistently drawn to early-stage businesses founded by exceptional entrepreneurs that also have businesses with immediately addressable opportunities. Businesses that may not be tackling massive global problems — yet — but have substantial near-term value potential. Candidly, these are businesses that can sometimes get overlooked around a board table for being not revolutionary enough, but to me, they are the investing sweet spot: immediate impact with the potential for long-term disruption. I can’t think of a better example of this kind of company than DroneBase, which is why I’m so proud that we have joined Fred Wilson and USV as investors in their second round of funding.
DroneBase provides a drone services platform through a national marketplace of vetted and experienced drone pilots. DroneBase enables clients one time or continuing access to affordable aerial imagery, video, maps and analysis for almost any location in the US. And although non-military drone usage has primarily been seen as a hobby in the US, DroneBase has generated immediate commercial traction.
An early area of focus for DroneBase in on real estate and property related business segments, including commercial real estate, residential real estate, real estate construction and development, real property insurance and the like. I have no doubt that almost every piece of real estate property constructed, inventoried, monitored, rented, sold or surveyed (whether residential or commercial) in the next few years will have an aerial image taken via drone as a core part of its profile or dossier. Easy and affordable access to drones will provide an obvious benefit to the participants in this huge market (the value of all real estate in the US is greater than the US stock market).
Do you think every agent, broker and underwriter is also going to be a drone pilot capable of providing this service? Exactly. DroneBase will let clients avoid having to be in the drone fleet management business, including the purchasing of drones, employing pilots, processing/analyzing raw imagery or paying suppliers yet still have access to the most state of the art service offering. DroneBase’s service can significantly undercut the pricing of aerial imaging from satellites, planes, and helicopters, while getting companies better data faster and of higher quality.
Consider the residential real estate market alone. The National Association of Realtors projects nearly six million home sales this year, of which 44% will be found online. It’s a massive industry — Zillow alone has 110M home listings, but those with any aerial images often have grainy, out of date Google Earth photos. In comparison, DroneBase provides clear, high-quality imagery of the home that is a marked improvement. When finding your next home, why would you not want to see the neighborhood and the environment?
It would be irrefutably cost-prohibitive for a company like Zillow or its sales agents participating on their platform to try to generate and maintain up-to-date aerial footage for all of their properties — not to mention an enormous drain on human capacity in managing one-off drone pilots for every location. And why would these companies choose to manage the process, when DroneBase can do it better, faster and cheaper? That’s not just my opinion. For past 18 months, DroneBase has focused on serving demand-side customers and the results have been impressive: now actively flying in all 50 states with partnerships with the largest brands in residential real estate (like Keller Williams and Zillow), commercial real estate (DroneBase is the only drone vendor approved at both CBRE and JLL), insurance (Allstate used DroneBase to do post Hurricane Matthew damage assessments), and leading, publicly traded companies in construction solar and telecom.
The demand side of the DroneBase opportunity is easier to see than the supply side opportunity. There is real traction on turning “drone pilot” into a profession, with some of the best pilots making enough money on DroneBase for this to be their full-time job. For many other DroneBase pilots, they get paid to do what they love (fly their drone) and earn some supplemental income. Despite the growth and progress, DroneBase still hears every day from pilots eager to sharpen their skills and start a career with their drones — and DJI is going to sell over a million drones in 2016 alone.
Of course, none of this early impact would be remotely possible without the leadership of founder Dan Burton. There are few people as uniquely qualified to manage DroneBase as Dan, who first started using tactical drones while serving as a Marine Infantry Officer in Iraq and Afghanistan. (Talk about your unfair market advantage.) Upon his return, he took a job at Goldman Sachs but kept using drones as a hobbyist. After graduating from Harvard Business School, he started DroneBase, leveraging his personal network of fellow drone pilots. And despite his business experience and literal hands-on category experience, Dan is one of the most humble, thoughtful entrepreneurs I have encountered.
So maybe advanced drone management for commercial properties doesn’t solve the world’s problems today, but in a short time Dan, co-founder Eli Tamanaha, and the DroneBase team have already built a viable business — one that I truly believe is building an unbeatable product and network that will be positioned to address problems we can only begin to imagine (first on my list: replacing LAPD search and rescue helicopters with a fleet of drones — saving time, money and maybe even lives).
Please join me in congratulating Dan and the DroneBase team not only on their funding, not only on their continued growth, but also on their ability to hit the ground running with a game-changing idea.
Here is an illustration of the services available from DroneBase. We put together a little something showing off the new(ish) Upfront Ventures office.
DroneBase: Long Term Disruption, Immediate Business Impact was originally published in Upfront Insights on Medium, where people are continuing the conversation by highlighting and responding to this story.