Zipline has raised $1.5bn at a $21.5bn valuation, the drone delivery company announced on Thursday. Paradigm, WCM Investment Management and Layer Global led the round. Valor Equity Partners, Fidelity, Uber, Tiger Global, J.P. Morgan, ARK Invest and Salesforce Ventures also invested.
On the same day, Walmart agreed to add 300 Zipline drone delivery sites in the US under a new multi-year deal. The two companies run 21 sites in Texas and Arkansas today, Bloomberg reported.
The valuation is almost three times the one Zipline reached in January, when it raised more than $600m. Bloomberg and Reuters put that earlier figure at $7.6bn, while The Wall Street Journal put it at $7.85bn.
Founder and chief executive Keller Cliffton told Bloomberg Television that demand had surprised both companies.
“I think both we and they have been quite startled by the level of customer demand.” Keller Cliffton, founder and CEO, Zipline
Where the money goes
Zipline said it will use the money to expand its US manufacturing and hire more staff as it builds a nationwide drone delivery network. Its factory near San Francisco International Airport can make up to 20,000 aircraft a year, according to Bloomberg.
Uber, which partnered with Zipline in August, is targeting 1m drone deliveries a day with the company by 2029, Zipline said. Zipline made more than 1m deliveries in the Dallas-Fort Worth area this year. Its median order in October arrived 19 minutes after checkout, against 30 minutes or more for ground delivery, the company said.
A group of its longest-standing restaurant partners saw delivery sales rise 26% between March and October. Zipline orders made up 80% of that increase, according to the company.
From medical supplies to takeaways
Cliffton co-founded Zipline in 2014. It began by flying blood to hospitals in Rwanda. Its African business now generates positive cash flow, Cliffton told Bloomberg. The company says it has flown 150m commercial autonomous miles without a safety incident.
It runs two drones. A long-range aircraft drops packages by parachute, and a quieter short-range drone lowers home deliveries on a tether. In the US, Zipline flies in Texas, Arkansas and Ohio. It plans to launch in Arizona soon, Kelly Cloonan reported for The Wall Street Journal.
Cliffton told the Journal that the national build-out would be hard.
“We have experience doing that, but still, this is a different scale and it’s going to be hard.” Keller Cliffton, Zipline
Rivals and hurdles
Regulatory approvals and community concerns over noise and safety still stand in the way of wider drone delivery, Reuters reported. Walmart also works with Alphabet’s Wing. Amazon is growing its drone service to about 500 US locations. DoorDash is building its own drones, and Ireland’s Manna is building a US factory.