CyPhy Captures $22M as New FAA Drone Rules Lift Off

The Federal Aviation Administration’s decision to green-light commercial drone use earlier this year appears to be spurring the deployment of even more capital into the fledgling sector.

The latest beneficiary is CyPhy Works, the Danvers, MA-based drone startup founded by iRobot co-founder Helen Greiner. CyPhy announced a $22 million Series B round today led by Bessemer Venture Partners, with participation from Motorola Solutions Venture Capital, Draper Nexus, and UPS Strategic Enterprise Fund, UPS’s investment arm. CyPhy previously raised $7 million in 2013.

The UPS investment is particularly telling. The global package delivery company is betting on CyPhy’s drone technology at a time when both Amazon and Google are investing in drones that would deliver packages to your doorstep.

Investors have pumped millions of dollars into drone startups over the past few years, despite federal restrictions on flying unmanned aerial vehicles. Others in this sector include Berkeley, CA-based 3D Robotics, which has raised more than $90 million to advance its drone technology, and San Francisco-based Airware, which has snagged more than $40 million. Airware isn’t manufacturing drones, but instead is selling software and hardware components that help others build custom drones.

The investments in CyPhy and its competitors could start to bear fruit now that the FAA unveiled proposed regulations in February for the commercial use of drones weighing less than 55 pounds. While those rules are being finalized, the FAA is granting drone permits on a case-by-case basis. More than 1,800 petitions had been granted as of Oct. 7, according to its website.

CyPhy envisions customers using its drones in public safety, construction, agriculture, journalism, mining, defense, and more, Greiner says in a press release.

The company has developed at least two types of drones. One is powered from the ground via a microfilament tether that CyPhy says keeps data more secure and ensures more reliable data transfer. It can fly up to 500 feet above ground level.

The other drone appears to be more consumer-focused. It’s small enough to fit in a cargo pocket and can be controlled by a smartphone or tablet.

The new money will help fund the commercial launch of the tethered drone, along with hiring more engineering, sales, marketing, and customer service employees, CyPhy says.

Jeff Engel is a senior editor at Xconomy. Email: jengel@xconomy.com Follow @JeffEngelXcon

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