The business of drones has ascended into the stratosphere, as investors have poured hundreds of millions of dollars into the tiny unmanned aircraft in hopes of turning them into big business.
Now Robert Wolf, the financier who is a confidant of President Obama, is raising his bet on an industry that has already drawn names like Amazon and GoPro and top venture capital firms like Accel Partners and Kleiner Perkins Caufield & Byers.
Mr. Wolf’s advisory firm plans to announce on Wednesday that it is spinning off its drone-services arm into a separate company. The business, Measure, is betting that its ability to fly the devices to take pictures of farmland and oil rigs will draw interest, and dollars, from a potentially huge number of customers.
Nearly two years ago, Mr. Wolf’s 32 Advisors set up Measure to capture that opportunity. Rather than focus on making the drones or the accessories and software that power them, he has banked on creating a fleet of aircraft that can be flown on behalf of customers. For Measure, it is “drones as a service.”
“We think that over the next 24 to 36 months, we’ll be able to fulfill something that doesn’t exist around the world,” Mr. Wolf, Measure’s chairman, said in a telephone interview.
Drones have increasingly attracted attention as entrepreneurs rush to figure out new applications for the devices — and push the boundaries of government rules over their use.
“It would be like when smartphones were launched, or when PCs were launched,” said Sameer Gandhi, a partner at Accel. “What do we do now?”
Drone start-ups raised $ 107 million last year. By June of this year, however, such companies had already surpassed that with $ 172 million raised, according to data from CB Insights. (By comparison, fewer than five venture financing deals for drones were struck between 2010 and 2012.)
And analysts have estimated that the commercial drone industry could swell to scores of billions of dollars in annual revenue.
Though consumers may know drones as $ 50 toys available on Amazon, start-ups and investors focus on higher-end aircraft like the $ 1,100 quadcopters sold by the Chinese manufacturer DJI.
In May, Accel poured $ 75 million into DJI in one of its biggest-ever investments — at an eye-popping valuation of roughly $ 8 billion. And Kleiner Perkins helped pump $ 40 million into Airware, which focuses on creating a software platform for drones.
For now, some applications are obvious, according to Mike Abbott, a partner at Kleiner Perkins. Drones can be used to survey tracts of land for farms or disaster areas for insurance companies at a fraction of the cost of helicopters. And they can replace human inspections for structures like cellphone towers, greatly reducing the risk to workers.
Later on, Mr. Abbott added, drones could be used for even more ambitious roles, like companions for police departments or emergency aircraft on cruise ships.
Since its formation, Measure and its team have focused on several priorities, according to Brandon Torres Declet, its chief executive. One has been demonstrating the value of drone services. That has meant working with the American Red Cross on studying how the aircraft can bolster rescue and recovery efforts in disaster zones.
And Measure has teamed with the American Farm Bureau Federation on a tool to calculate how much farmers can save by using drones to scout crops, map terrain and quantify insurance.
At the same time, Mr. Wolf and Mr. Declet have persistently lobbied the Federal Aviation Administration to expand its drone guidelines, particularly for the sort of broad business use that Measure envisions. In August, the two succeeded, winning what they call the biggest exemption yet granted by the F.A.A., gaining permission to fly 324 different aircraft for a variety of business uses.
“We pushed the boundaries at the F.A.A.,” Mr. Declet said. “This is going to help the industry.”
Mr. Wolf and Mr. Declet sought ways to give Measure room to expand independently of 32 Advisors. They approached Hudson Bay Capital and an unnamed sovereign wealth fund to provide additional capital, though Mr. Wolf declined to disclose the financial terms of the investments.
Still, many more regulatory hurdles need to be cleared, according to investors. Among them is to let operators fly drones out of their field of vision, a big stumbling block for transforming drones into the airborne autonomous helpers of science fiction.
But Mr. Wolf and Mr. Declet insisted that they are ready for whatever leaps the drone industry is set to make in the near future.
“I don’t think there’s any other company in the country in our position,” Mr. Declet said.
NYT > Business Day