Lilium J013 air taxi flying over islands

Summary List Placement

Few investment realms are as riddled with unknowns as aerial mobility, the young field hoping to turn commuters into aeronauts with air taxis, or flying cars.

It’s a new form of aviation that uses novel propulsion strategies, and it requires world-class engineering, is up against stringent passenger-safety requirements, and is directed at a market that investors can only hope will emerge as analysts predict.

Of course, investors are well aware that such things take time, and many have proved themselves game for going long. Lilium Jet, Joby Aviation, Kitty Hawk, Archer Aviation, and more have secured support in the hundreds of millions of dollars each to develop their aircraft.

Michael Pye, an investment manager with the Edinburgh, Scotland-based Baillie Gifford, says part of the appeal of his company’s recent investments in both Lilium and Joby is the broad influence they herald.

“We are drawn to business models that benefit society by removing friction from some aspect of people’s lives,” he said in an interview with Business Insider. “Affordable, on-demand flight at 186 mph promises the ultimate removal of friction, short of going to space.” 

But while you may have to wait to take your commute airborne, investors looking for payoffs in the shorter term have another way into this industry.

Cyrus Sigari, the cofounder of the aeromobility-focused venture-capital firm UP.Partners, said that just as important as investing in the companies making aircraft is investing in those developing the myriad technologies that will enable the likes of Joby and Lilium to take off. These include advanced additive-manufacturing technologies, autonomous control systems, computer vision and machine learning, battery- and hydrogen-based propulsion systems, and sensing and communications. 

“There’s a rather large world of things for people to invest in that isn’t a flying car or eVTOL company but which still offers exposure to the future of moving people and goods in all three dimensions,” Sigari said.

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Sam Korus, an analyst at ARK Investment Management, told Business Insider that drone developers provided not only an entry point to urban air mobility but also exposure to technologies being deployed across many sectors.

“They innovate in battery technology, 3D printing of lightweight components, artificial intelligence, and computer vision,” he said. “Those all have huge implications across not just drones but autonomous driving and other mobility sectors.”

Regardless of whether they’re looking at companies seeking to deliver aircraft or the companies that are enabling their development, investors have a variety of metrics to gauge the viability of mobility-centered initiatives. Baillie Gifford’s Pye, for instance, is keen on founder-led teams with “the creativity and resources” to pursue their vision and leadership that possesses a clear hypothesis about how the early advantages might assert themselves over time. 

Korus looks for cost declines in key technologies that are applicable across the sector and a firm understanding of unit economics for the technology.

“If the company is operating out there, and the economics just don’t make sense, that’s something we’d want to avoid,” he said.

Sigari said some of the key qualities he looked for in prospective investments …read more

Source:: Business Insider


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