CyPhy Works

Drone Maker CyPhy Raises $22 Million for Two-Prong Strategy

Robot maker iRobot has long had two major lines of businesses: its famous disc-shaped vacuum cleaning robot called the Roomba; and another robot that, well, disposes of bombs.

Cofounder Helen Greiner says iRobot — now a publicly traded company currently valued at $940 million — “wouldn’t been able to have struggle through” without both.

No wonder Greiner is again focusing on disparate lines of business at her seven-year-old drone company, CyPhy Works in Danvers, Mass, a startup that has just raised $22 million in Series B funding.

On the one hand, CyPhy is about to start mass producing its Persistent Aerial Reconnaissance and Communications (PARC) drones, which can fly as high as 500 feet in the air and hang there for 100 hours at a time. How? They’re tethered to the ground with a highly specialized microfilament that both powers them and acts as a secure communications link. As an added bonus, the tether keeps the robots from flying away in sandstorms and other harsh conditions.

The PARC drones have mostly been used to date by the U.S. military, which employs them at combat posts to monitor compounds. The drones can also accept a variety of payloads. But now that the FAA has begun more freely authorizing the use of unmanned aerial vehicles for non-governmental purposes, Greiner is expecting enterprise customers of all kinds to start ordering them, from mining to port security to construction to even media companies.

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In Talk of Amazon and UPS Delivery Drones, a VC Sees Dollar Signs

Amazon and UPS made big news this week, disclosing that they are experimenting with flying parcel carriers, respectively.

But the companies’ eventual use of drones isn’t what’s interesting to VCs like Bilal Zuberi, an investor with Lux Capital who has been studying the drone space for several years. The real story, as far as he’s concerned, is that two major commercial deployment opportunities have come into view, validating the market for unmanned aerial vehicles (UAVs) — and creating exit opportunities for them.

The development is of particular interest to Zuberi, whose firm owns a piece of CyPhy Works. CyPhy builds UAV hardware and software and could ultimately be involved in delivering your Amazon loot.

Jeff Bezos hasn’t invested in the company, but CyPhy was founded by iRobot cofounder Helen Greiner, and Zuberi tells me that Bezos is “close to the iRobot family.” (Bezos has invested in Rethink Robotics, a manufacturing robot company started by iRobots cofounder Rodney Brooks.)

Even if Amazon — which acquired the robotics company Kiva System last year, paying $775 million for the company and putting its robotics warehouse workers to use — doesn’t buy CyPhy, Zuberi suggests that Amazon’s embrace of delivery robots could encourage other potential acquirers from Walmart to FedEx to enter the market.

“People always ask me, ‘If you’re successful, who would buy you guys?’ Well, Amazon [has bought a robotics company]. Why would UPS or FedEx not buy one of these [UAV] companies?”

Of course, that’s all years down the road. UAVs, currently used in military applications, can’t access U.S. national airspace until the beginning of 2015. And initially, only limited drone activity will be permitted so that the Federal Aviation Administration can adjust its policies if need be.

Even then, observes Zuberi, companies like Amazon and UPS will likely stick to demo deployments for a while, as they figure out a raft of likely issues that extend well beyond picking up and delivering boxes to the right location. Among numerous other considerations, the companies will need to determine how to tightly integrate the technology into their supply chains and ensure the drones’ sensors can operate safely in crowded neighborhoods.

Zuberi thinks that by the time drones are flying paper towels to consumers, the technology will work as it should.

“I love where you have military and government use cases involved,” he says, “because they test and they test for resiliency and redundancy. These guys can’t have failures. Everything has to be perfect.”

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The FAA Shows Drone Companies a Way Forward

Yesterday, the Federal Aviation Administration released its first “roadmap” for allowing unmanned aerial vehicles (UAVs) access to U.S. national airspace beginning in 2015. The idea is to permit some drone activity while preserving enough flexibility for the FAA to adjust its rules and regulations if it needs to.

The step was a welcome one for entrepreneurs who are working on flying robots for the military — whose airspace isn’t regulated by the FAA — but who will soon be able to sell to a variety of commercial industries, including agriculture, construction, oil, gas, and mining.

“There’s a light at the end of the tunnel now,” says Bilal Zuberi, a Palo Alto-based partner at Lux Capital, who sees a whole new industry about to emerge — with droids as just the starting point. He likens the moment to “when the satellites first went into space and data became available. You could do so much more with it than people imagined.”

Think maps that update in real-time or sophisticated applications that notify farmers when crops have been afflicted with specific diseases.

“Right now, people are thinking about just the hardware,” notes Zuberi, “but the hardware will lead to huge software opportunities downstream.”

CyPhy Works is one example of a startup that is building UAV hardware but betting on a future in software. The Boston-based company — which announced $7 million in fresh funding this week led by Lux Capital — makes a 3-pound flying robot and a larger, 12-pound model that are both tethered to portable command stations but can float up to 500 feet off the ground and hang there for hours while beaming down high-definition video.

The company’s primary customer right now is the U.S. military, which is using the drones at combat outposts to monitor compounds and facilities, among other things. (The drones can accept a variety of payloads, from three-dimensional scanners to sensors for chemical detection.)

CyPhy founder Helen Greiner — who earlier cofounded iRobot, which remains best known for its Roomba vacuum cleaners – sees a huge software opportunity coming when UAVs are permitted to share the skies with civilian aircraft.

“It’s a good time to be developing commercial applications, which we view as any opportunity to help manage a project using a bird’s eye view, whether it’s monitoring a bridge being built, a pit being dug, or a facility to see what people are doing,” she says.

Part of that process will involve convincing customers that they need satellites of flying cameras to replace their stationary cameras. But Greiner wants to be able to provide them with automatic detection and imagery analysis, too.

I ask Greiner about the privacy concerns that have been holding up the FAA. What about people buying UAVs to spy on their neighbors? “I share that [privacy] concern,” she says. “I don’t want one outside my house. But that’s not what we’re building here.”

What of the competition? After all, according to the FAA, there could be at least 7,500 commercial drones in use within five years.

Greiner suggests she isn’t concerned with what others are doing. She tells me about the top engineers she has hired from iRobot and other UAV companies. Grenier also talks about her passion for her work. “I’ve wanted to build robots since I was 11…it’s exciting stuff to be doing.”

Most crucially, she notes, no one is leading the pack at this early date. “It’s still very early in the game.”

Picture courtesy of CyPhy Works.

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CyPhy Works

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