$7.5 million to push last-mile drone delivery closer to reality

Drone logistics is still a hodgepodge of pilot programs and promising proposals. But urban drone delivery is coming.

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Drone logistics firm Flytrex has secured $7.5 million in Series B funding, adding to a $3 million Series A in early 2017. The Israeli firm has been aggressive pursuing real world testbeds and pilot programs to demonstrate the economic efficacy of urban drone delivery.

Last year, Flytrex expanded delivery routes for Icelandic ecommerce company Aha.is and is currently serving about half of Reykjavik with last mile drone delivery. In the U.S., which has notoriously stringent (some in the industry would say outdated) commercial drone rules, Flytrex has teamed up with private industry to tiptoe around regulation. Last year, the firm partnered with drone company EASE Drones and a private golf course in North Dakota to launch an on-course beverage delivery service. The service complies with FAA rules thanks to liability and consent waivers signed by every person who enters the course.

In a bid to explore drone delivery, the FAA has more recently announced the Unmanned Aircraft System (UAS) Integration Pilot Program. Funds from Flytrex's latest round will be used in part to prepare for the FAA's pilot in North Carolina.

"Drone delivery is taking off, and we are delighted that BGV and btov will be joining us in making drone deliveries a global reality," said Yariv Bash, CEO and Co-Founder of Flytrex. "This investment is a vote of confidence in Flytrex' ongoing success propelling the drone industry forward and in our vision of making UAV delivery the rule rather than the exception." 

Even with the FAA pilot, it's clear that regulatory hurdles are still a major impediment to drone delivery taking flight in the U.S. Deployment of small unmanned aircraft is restricted under the FAA's Rule 107. Currently, small drones must stay within line of site of an operator and can't be autonomous, two factors that make it very difficult to scale delivery. 

Funds from the latest investment round will be used to improve delivery services in Iceland and North Dakota, and prepare for the company's 2019 North Carolina launch as part of the U.S. Federal Aviation Authority's (FAA) Unmanned Aircraft System (UAS) Integration Pilot Program. 

An exemption to the rule known as Exemption 333 opens the door a bit wider, but the exemption still prohibits commercial drone use within 500 feet of non-participating people and structures, which precludes any conceivable urban delivery application.

But the stakes are high and overcoming the regulatory challenges could be a boon for smaller and medium-sized businesses. Flytrex, which is tackling technical challenges like wire-drop delivery and phone app integration, sees a future in which smaller retailers can contract with drone delivery services to offer ultra-fast same-day shipping in town, an important weapon in the fight against Amazon's delivery domination.