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

Sep 21, 2018

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 shut down 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 their inception, there was much hype about their ‘vision’. The funds were also flowing in steadily. In 2016, they acquired a French cloud-based commercial drone analytics company called Redbird. The World Economic Forum had acknowledged them as one of 30 global Technology Pioneers. They had quite a few lucrative partnerships under their belt. And, to top it all, their new office in Tokyo, Japan, had opened its doors only four days before the shutdown announcement was made. 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 once it became clear that there was no winning over the reliable, low-cost drone solutions China was manufacturing. Unfortunately, the pivot to software came way too late.

Some industry insiders are also of the opinion that the company had a bigger problem than just 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, the commercial UAV industry today is booming, with even developing countries like India opening up its skies to legalize drone operations. So, here’s hoping Airware’s fate will not lead to bearish sentiments putting a damper on this party.