San Francisco-based Elroy Air has announced $40 million in fresh financing to further the development of its hybrid-electric Chaparral cargo drone.
Contributors to Elroy Air’s Series A round include Marlinspike Capital, Lockheed Martin Ventures, and Prosperity7 Ventures, along with existing investors Catapult Ventures, DiamondStream Partners, Side X Side Management, Shield Capital Partners, and Precursor Ventures — bringing the company’s total funding to date to $48 million.
According to Elroy Air CEO David Merrill, the new capital will propel the company into an “exciting new stage” as it prepares the next iteration of the Chaparral for flight testing with the U.S. Air Force’s Agility Prime program. In addition to supporting the build of several pre-production flying prototypes, the funding will allow the company to grow its team across all areas of the business. Elroy Air recently made a key leadership hire in chief operating officer Jay Wakenshaw, and plans to approximately double its current headcount of 30 over the next nine to 12 months, Merrill said.
The participation of Marlinspike Capital — a veteran-owned investment firm that specializes in defense technologies — and Lockheed Martin Ventures, the venture arm of the leading defense contractor, signals strong interest in potential military applications of the Chaparral. The VTOL drone is targeting a range of 300 miles (480 kilometers) and a payload of 300 to 500 pounds (135 to 225 kilograms), offering considerable potential for autonomous aerial resupply.
“Elroy Air is a perfect example of the type of high-growth company that we invest in,” Marlinspike CEO and chief investment officer Neil Keegan stated in a press release. “We invest in the most promising dual-use technology companies, and the Elroy Air team is leading the field with its unique technology and its opportunity to revolutionize both the commercial and defense logistics markets.”
Chris Moran, executive director and general manager of Lockheed Martin Ventures, added: “Lockheed Martin is committed to identifying and investing in leading-edge technologies that will contribute to the national security solutions of the future. Unmanned aerial systems and VTOL aircraft are key emerging technologies in this effort, and we are excited to partner with Elroy Air to accelerate their innovative approach to automating aerial logistics.”
Elroy Air recently completed a Direct to Phase 2 Small Business Innovation Research (SBIR) contract with the Air Force and has moved into a Phase 3 contract, the key goal of which is “to tee up Chaparral for acquisitions by the Air Force,” Merrill said.
“The first portion of the contract has been about demonstrating and documenting the engineering milestones that are along the path to this next version of the aircraft being integrated and flown,” he explained. “And then the next portion of the contract is all about flight test, and system validation in the air.”
Merrill said that Elroy Air will be doing final integration and ground tests of the Chaparral between now and the end of the year, with the expectation of launching flight testing in early 2022. In partnership with the Naval Postgraduate School, the company conducted a flight test campaign with an earlier version of the Chaparral in 2019, then spent the COVID-19 pandemic grounded and focused on improving the aircraft’s design.
Kofi Asante, VP of strategy and business development for Elroy Air, said the company sees the U.S. Department of Defense as a “beachhead customer” that will support its gradual expansion into commercial markets as the regulatory landscape for autonomous aircraft permits. Elroy Air expects to find its first commercial and humanitarian opportunities overseas, specifically in environments that have “challenging infrastructure, whether it’s flying over water or flying over unreliable roadways,” Asante said.
“The long-term opportunity,” he continued, “is obviously being here in the U.S. with FAA certification and commercializing that domestically” — at which point the Chaparral should have plenty of operational data to support its safety and business cases.
“Logistics and delivery services market is huge, and it will continue to grow with the continuing growth of e-commerce,” stated Aysar Tayeb, executive managing director of Prosperity7 Ventures. “We believe targeting logistics will help accelerate development of the VTOL space and pave the way for other applications.”