Air Taxi Market Ready For Lift Off

TECH IN THE NEWS

Oil Crisis - Brent crude rose 8% in the week to Thursday on escalating fears of a Middle East conflict and potential US-backed attacks on Iran’s oil refineries.

Bank Tokenization - Global bank transfer network SWIFT will trial live transactions of tokenized assets and digital currencies next year to improve speed and efficiency.

Dockworkers' Strike - The East Coast docks strike is largely about the union's effort to protect jobs from automation that, to many, looks inevitable per Axios.

Sustainable Semis - The Commerce Department will award $100M to institutions working on the use of AI in developing new sustainable semiconductor materials.

2nd AI Bill Killed - A federal Supreme Court judge blocked a Californian AI law signed by Gov. Newsom that would have given powers to take down AI deepfakes.

COMPANIES TO WATCH

OpenAI - After weeks of speculation, the company raised $6.6B at a $157B post-money valuation, possibly the largest VC deal of all time. The round was led by Thrive with $1.25B, with Microsoft, Nvidia, SoftBank, Khosla, Altimeter, Fidelity, and MGX participating. It also secured a $4B credit line.

Poolside - The AI-powered software development platform raised a $500M Series B led by Bain with Ebay, Nvidia, LG, Citi, HSBC, DST and StepStone joining in at $3B.

Data Funds - 1. Equinix signed a JV to raise $15B for US data center infrastructure. | 2. Microsoft will invest $4.8B in Italy for AI infrastructure and cloud capacity.

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THE HOTTEST THING IN TECH
Air Taxi Market Ready For Lift Off

This week saw two major announcements in the US air taxi sector. Joby Aviation raised another $500M from prior-backer and partner Toyota and Beta Technologies unveiled Monday a new passenger-carrying vehicle. While still in its nascent stages, the electric vertical take-off and landing (eVTOL) taxi market presents a compelling longer-term investment opportunity, particularly in the US and Korea. Driven by eVTOL tech advancements, a growing need for efficient urban transport solutions, and supportive government initiatives, the market looks to be poised for lift off. 

Market Growth and Drivers

The global air taxi market is projected to experience significant growth, with estimates ranging from $4.04 billion at a CAGR of 23% to USD 8 billion by 2030-32. North America dominated the global market in 2023 with 30%+, due to technological innovation, investment, and favorable regulations. Key growth factors include:

• Advancements in high-energy-density batteries and efficient electric propulsion have extended flight ranges, and increased safety and reliability.

• Air taxis offer a potential solution to traffic Congestion in major cities by utilizing airspace, providing faster and more efficient point-to-point travel.

• The FAA is actively working on regulatory and certification processes and air traffic management systems for low-altitude urban airspace. 

• An Influx of capital from VCs, tech giants, and established aerospace manufacturers is driving innovation and accelerating commercialization.

Key Players and Strategies

California startup Joby Aviation is a leading market contender backed by a substantial investment from Toyota now $894M. Its focus is now on obtaining FAA Type 2 Certification for commercial ops and scaling up production with Toyota's support. Joby acquired Uber’s air taxi moonshot Elevate in 2020 in a deal that saw Uber invest $75M, and it aims to make trips as affordable as an Uber Black.

LA’s Archer Aviation is another key US player. Its strategy centers around leveraging existing infrastructure like unused airports and helipads to minimize initial investment. Its data-driven approach to vertiport location selection, using customer data from partners like Southwest and United Airlines, ensures high demand and efficient routing and offers seamless integration with existing airline networks. Archer also has a partnership with automaker Stellantis, and aims to serve LA’s SoFi Stadium for major sport events like the 2026 World Cup, and the 2028 Olympics.

Vermont’s Beta Technologies has raised $860M+ from investors like Amazon. Its core strategy is to sell aircraft and infrastructure to defense, cargo, and medical logistics companies with existing UPS and U.S. Air Force deals. Beta is also expanding into air taxis by adapting its existing eVTOL aircraft. Its cargo focus and partnerships with potential customers like Blade give it a potential advantage.

Market Challenges

While the air taxi industry holds promise, challenges include:

• A lengthy and stringent Certification and Safety process.

• Development of supporting infrastructure like vertiports, charging stations, and maintenance facilities through public/private sector collaboration.

• Solving financial viability to move from R&D/testing to commercialization will require substantial investment and strong demand, which isn’t yet certain.

Investment Landscape and Opportunities

So how realistic is the investment opportunity? 

• High Upside Potential with the industry still in its early stages.

• Cutting-edge Tech Proxy. The sector is driven by rapid tech advancements in battery tech, autonomous flight, and AI, so offers good exposure to these.

• The growing number of strategic partnerships between startups, aerospace & tech companies, and airlines gives the sector a degree of credibility and inevitability.

• Government Support through funding, regulatory initiatives, and pilot programs also gives it credibility.

Korea: Another Promising Market

With its focus on technological innovation and urban mobility solutions, South Korea is emerging as a significant player in the air taxi market. The Korean government's support through regulatory initiatives and pilot projects, coupled with investments in infrastructure development, creates a favorable environment. Archer has strategic partnerships with local ride-sharing player Kakao Mobility to integrate into its mobile app. Supernal, a Hyundai subsidiary, is also developing an eVTOL aircraft, targeting commercial passenger flights by 2028.

Conclusion

While challenges remain, the market's high growth potential, tech advancements, industry interest and increasing traction offer significant opportunities for investors. As the industry matures, investors who identify and back the right flying horses could reap substantial rewards. Air taxi companies like Archer and Joby are incurring deep R&D and logistics losses, per SEC filings, and this will only increase as they scale up so they likely won’t be profitable any time soon. This looks like another long- to mid-term play in the current environment unless the government intervenes.

FOR INVESTORS
Open Deals

Request an intro to founders - [email protected]

1. 🔥⏱️ Robotics for Agricultural Efficiency - Pittsburgh - Built & deployed robotic hardware for the largest U.S. tree nurseries, reducing costs and increasing efficiency by 50x. Hardware and AI data layer. Beginning to scale globally. Post-revenue, at capacity. (Seed+)
   

2. 🔥⏱️ Quant Trading Software Company - New Jersey - Large-scale automated day-trading algorithm designed for volatile U.S. equity markets. Profitable through extensive backtesting and live simulation. Seeking equity investment for software company.

3. Cricket for the Modern World - India - Physical and virtual ecosystem fostering cricket experiences for enthusiasts and upcoming pros. Data-driven, locally proven, globally scaling. (Seed)

🔥 — hot deal!
⏱️ — leaving soon.

FOR EMPLOYERS
Job Candidates

Request an intro to candidates - [email protected].

1. Struck Capital Venture Associate, ex-West2East (Russell Wilson) Director of Special Projects, ex-Phoenix Holdings Investment Associate. Harvard BA. Vietnamese pro basketball player.

2. Lockheed Martin Software Engineer, ex-Rutgers Junior Full Stack Developer. Secret clearance. Expertise in C++, PHP, SQL. Rutgers BA in Computer Science.

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