“After record inflows of funding in 2021, funding has resumed more normal growth thus far in 2022” according to a new report published by McKinsey at Farnborough International Air Show.
“Over the past five years,” says the report “we have seen high interest in the future air mobility (FAM) industry, driven by technology advancements in areas such as electric propulsion and advanced flight controls, along with a growing societal focus on sustainability and the emergence of mobility as a service.
“Existing aerospace companies and more than 500 new industry participants are currently developing new FAM offerings across sustainable aviation, supersonic aircraft, passenger electric vertical take-off and landing (eVTOL) aircraft (sometimes called flying cars), and surveillance or cargo drones.
“The industry has seen a decline in funding in the first half of 2022 compared to 2021, and some may question whether FAM players will continue to attract capital. We believe that scepticism is misplaced. True, funding has slowed on an annual basis, but that is compared to a record $6.9 billion in disclosed funding in 2021. Over the long-term, capital flows are still ahead of the pace in prior years.”
In a press release McKinsey says that “analysis of it’s most recent data indicates the FAM funding boom is evolving as it grows.
- Industry funding to date now sits at $14.7 billion, a $1.9 billion or 25% increase in just the last six months.
- Funding since last year has shifted to the sustainable aviation segment; it was previously dominated by manned FAM at 70%, which is only at 50% in 2022.
- After a SPAC frenzy, the deal value and deal count shifted back towards venture capital with 75% going through VC in the last six months, versus 50% in 2021.
- Decarbonization will drive more interest in sustainable conventional take-off and landing aircraft powered by battery electric, hybrid and hydrogen sources.
- The cargo delivery market could be ready to scale with potential capital influxes from small to large drone sizes.
- Most early VC money in FAM was allocated to the first cohort of entrants. As markets mature and more niches emerge, many fast followers may invest.”
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(Image: McKinsey)
