China's Ehang gets US$42 million to expand commercial use of drones as industry start-ups lure windfalls

PUBLISHED : Tuesday, 25 August, 2015, 3:49pm
UPDATED : Tuesday, 25 August, 2015, 5:20pm

Ehang has become the latest Chinese drone maker to attract significant capital, with the start-up announcing on Monday that it has raised US$42 million in a series B round of funding.

It said it will use this to further research ways of expanding the commercial use of drones to include search-and-rescue missions, mapping and agriculture, among other plans.

Investors included at least six Chinese funds. The round was led by China's GP Capital, which manages US$1.4 billion, but also included ZhenFund, Lebox Capital, Oriental Fortune Capital, PreAngel and US-based GGV Capital.

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Drones have a variety of uses beyond their military application, such as water and disease control in farming, faster and more accurate mapping, and gathering large amounts of data for agricultural use.

Venturing into these areas could put Ehang in direct competition with China’s DJI, the world leader for civilian drones. 

Based in the former boomtown of Shenzhen, in southern China’s Guangdong province, DJI controls about 60 per cent of the global market.

Ehang said its latest windfall will also be used to grow its team and fund its market expansion in a rapidly heating-up industry where comprehensive regulations are still being formed. 

To protect this fledgling industry, in which China ranks as the dominant player, Beijing recently imposed a ban on exports of certain high-performance drones. 

Media reports say this was aimed at minimising the risk of its homegrown technology falling into the hands of foreign rivals, or those with malicious intent.

Ehang is famous for the Ghost Drone, a quadcopter (named after its use of four rotors) designed for aerial photography and video shooting using GoPro cameras. The gadget can be controlled remotely by a user’s smartphone.

Ehang declined to reveal its newly revised valuation, but said it is now worth about 100 times more than when it was first launched.

READ MORE: US sees big surge in close calls between aircraft and hobby drones

The start-up raised over US$1 million from crowdfunding sites Indiegogo, Demohour and Taobao Crowdfunding when it initially set up in early 2014.

Another funding round at the end of last year saw it raise US$10 million from some of the same Chinese funds. 

Ehang is competing with scores of drone start-ups in China, most of which are based in Shenzhen. 

Beijing-based start-up Aheadx raised US$2 million this month while another Chinese drone maker XAircraft attracted 10 times as much capital this year.

DJI, which raised US$75 million in May, saw revenue reach US$500 million last year.