Airware shutdown: How to crash and burn a $118M drone startup

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On April 19, 2018, Yvonne Wassenaar, CEO of Airware, announced in a blog post that the commercial drone technology provider had closed $8.5 million of funding, bringing its total backing to $118 million.

“We will continue to expand both our go-to-market and our product development partnerships to support our global expansion and increase the value of our solutions. And we’ll keep innovating. It is in our DNA,” Wassenaar insisted, pointing out how the drone startup was aggressively driving market momentum and growth since it was founded in 2011.

Fast-forward to September 14, 2018; Airware published another blog. But this time, there was no author; no one to take the ownership of the statement which read: “History has taught us how hard it can be to call the timing of a market transition… Unfortunately, the market took longer to mature than we expected. As we worked through the various required pivots to position ourselves for long term success, we ran out of financial runway. As a result, it is with a heavy heart that we notified our team, customers, and partners that we will wind down the business.”

And just like that, Airware shut down. Screenshots from the Airware alumni Slack channel sent to TechCrunch detailed how the employees were told in the morning that the company will close its doors effective 2 pm that day. Almost 100 employees were laid off with just one week of severance pay.

But, where did Airware go wrong? Right from its inception, there was much hype about the company’s ‘vision’. The funds were also flowing in steadily. In 2016, it acquired a French cloud-based commercial drone analytics company called Redbird. The World Economic Forum acknowledged it as one of 30 global Technology Pioneers. The company also had quite a few lucrative partnerships under its belt. And, to top it all, its new office in Tokyo, Japan, had commenced operation only four days before the shutdown announcement. So, what really went wrong?

Turns out, Airware is a classic example of weak leadership combined with a startup mismanaging its funds, despite having a long list of prestigious investors backing it. A crazy amount of money that Airware raised was sunk into developing not just proprietary drones but almost everything from processors to the autopilot OS. An ex-employee detailed on Hacker News how “nothing was ‘good enough’ so everything was invented.”

Of course, eventually, Airware founder Jonathan Downey had to concede and divest the hardware side of the business in favor of software develoment. It had become clear to him that there was no winning over the reliable, low-cost drone solutions China had started providing. Unfortunately, the pivot to software came way too late.

Meanwhile, some industry insiders are of the opinion that the company had a bigger problem than a plain hardware/software dilemma; it was simply out of touch with reality. Av8Chuck, an advanced member on UAV Coach forum ranted: “They failed because they were led by a millennial [who had] no idea [of] the history of [drone market] transformation… We competed head-to-head on a couple of large projects and they had no idea what they were doing and how two guys in a garage could compete, let alone win that size of contract.”

Whatever be the case, there’s no denying that the commercial UAV industry today is booming. Even developing countries like India are opening up the skies to legalize drone operations. So, here’s hoping Airware’s fate will not lead to bearish sentiments putting a damper on this soaring party.

Ishveena is a geospatial enthusiast and a veteran of creating and managing compelling digital content for organizations and individuals. When she is not making magic at her desk, you are likely to find her exploring nature, eating her way through life, or binge-watching funny animal videos.