When Eric Peck and Josh Tepper launched Swoop Aero in 2018, they had
already raised a small amount of capital from family, friends and
early-stage angel investors. But as the scale of their drone supply
start-up rapidly grew, they needed more. “The technology and long-term
vision alignment we saw in venture capital was what drove us down that
path,” Eric explains. “It wasn’t all about what the return on capital was
going to be in a five-year period. It was how to build the next big company
of the future. We really wanted that.”
He recalls meeting Alister Coleman, founder and managing partner of
Folklore Ventures (formerly Tempus Partners), at a Startmate Sydney pitch
night. Before a deal could be nailed down, however, Erick had to leave for
Vanuatu where Swoop was contracted to deliver vaccines in the remote
Pacific Ocean island chain. The negotiations with Folklore and Right Click
Capital were finalised weeks later over a dodgy phone line to an island
called Epi.
“We had to stand in one position, on a mound in a village, to get reception” - Eric Peck
“We had to stand in one position, on a mound in a village, to get
reception,” Eric recalls. Alister cites another memorable Vanuatu phone
call, the first Swoop Aero board meeting to be held which included Folklore
and Right Click Capital. “We were ready to start, when Eric interrupted the
call to tell us they had saved a woman’s life that day. She gave birth on a
remote island, but there was no available clotting agent required to save
her life. They got it to her in 22 minutes. The only other way was on a
small speed boat which would have taken six hours. It was so satisfying to
know that our investment in the company had that outcome.”
It wasn’t just the investors on a high. So too were the founders. “The
ability to raise capital gave Josh and I a lot of confidence to pursue what
we had started,” Eric said. “It felt like we had a couple of smart people,
who surrounded themselves with other smart people who thought we were smart
too. It gave us a kick. We were confident because they thought what we were
doing was possible too.”
Another important boost was that Swoop also gained access to a deep pool of
business expertise and experience to be tapped for advice, guidance,
mentorship and to help the company develop its growth plans. On top of
this, the networks of both venture capital groups opened doors to other
founders that offered further networking opportunities.
Garry Visontay, founding partner at Right Click Capital, says a unique part
of his business is that its directors have all been entrepreneurs. “We have
all built businesses. We can bring to founders our experience and
expertise. Help them through the problems that they will face and that we
have faced too. It’s an operational perspective to help them sort things
out.”
“We have
all built businesses. We can bring to founders our experience and
expertise. Help them through the problems that they will face and that we
have faced too. It’s an operational perspective to help them sort things
out” - Garry Visontay
Apart from both holding board seats, Right Click and Folklore cite a range
of services they have brought that have eased the burden on Swoop’s
founders. They range from planning and strategy to interviewing key
executive hires, reviewing legal documents and advice on hiring and
terminating people. “The business has grown very quickly,” Garry says. The
board tends to meet quarterly not monthly, leaving the founders to work
hard on productive outcomes. But the venture capital directors hold
fortnightly calls with Eric to review progress and discuss any issues that
he is facing. Typically, that can be issues with capital allocation, capex
and decision-making discipline. In a young business such as Swoop, the job
of the founders is to get things done as quickly as possible within an
efficient and agile governance process.
There have now been two venture capital rounds, which Eric says has enabled
Swoop to continually bring on the people they needed in the team. He
believes it has helped the business to mature. “We have gone from being in
a garage to now, where we lease the former GE head office in Port
Melbourne. We are building aircraft using very mature manufacturing
systems, a quality assurance program and, in the cloud, a full replica of
the aircraft and its components. It has enabled us to build towards a
solution that is very scaleable. We have not been caught out or forced to
make compromises. Our system can now support thousands of aircraft in the
air simultaneously across the world. The capital has enabled us to focus on
that goal, and not have to make concessions that would make it hard to
achieve.”
From the very start, Swoop has had a major focus on maintaining diversity
in gender and experience within its team. With about 50 employees, many of
the senior roles in technology and operations are held by women, including
its head of business operations and chief commercial officer.
“It is clear that maintaining a broadly diverse workforce on race, gender
or background is essential to being able to innovate and deliver our end
result. It has definitely given us an edge in the way we develop, think and
present to customers” - Eric Peck
An early criticism that Swoop received when seeking potential venture
capital shareholders was their global business model. But any doubters have
been proven wrong. With the onset last year of COVID, its services
experienced strong demand in Africa flying medical supplies into remote
villages in the Democratic Republic of Congo, Malawi and Mozambique.
Typically, drones would be based at regional hospitals and fly to remote
villages with medicines. On the return flight, they would carry patients’
samples and tests to be analysed and sent back on a return trip. Those
services are backed by big name donors and healthcare agencies including
Gates Foundation, UNICEF, the UN, USAID and UK Aid.
Most recently, Swoop has established a pilot network of flights in rural
areas of Victoria with logistics suppliers, healthcare operators and the
public. The work could involve up to 10 drones operating 20-50 flights a
day to evaluate the potential. All going well, that could expand to
hundreds of flights if commercial approval is granted. Similar services are
already operating on a commercial basis in England and Scotland, taking
COVID vaccines to remote areas.
The sky seems to be the limit, really. Swoop wants to establish an approved
manufacturing centre in Australia to supply drones for use around the
world. A new round of capital will be required to meet certification
standards and to establish a next generation manufacturing centre. “This
will create a regulatory and technical moat for the company,” Eric
explains. “Once we get more customers, they are going to be very sticky.
They won’t want to move away from us. It will be the premier service of its
kind in the world.”
He sees that a local sharemarket listing could eventuate. “Our goal is to
have a logistics service that reaches 100 million people by 2025, focussing
on lower and mid-income countries.” The company is aiming to manufacture
1000 aircraft each year, providing them with a force of double that many
craft in the air in any country at any time.
Click here to watch Swoop Aero's Chief Commercial Officer, Sabrina Ravail, reveal how the company delivered critical supplies during COVID-19.
More recently, Swoop Aero’s newly-launched, next-generation aircraft, Kite,
is undergoing FAA certification, and a pilot network of
flights is underway in rural Victoria that could expand to hundreds of
flights when commercial approval is granted. Similar
services are already operating on a commercial basis with partners in England and Scotland, taking COVID-19 vaccines to
remote areas.
In September, the Australian Investment Council lodged a very
important submission with the Federal Department of the
Treasury and Industry Innovation and Science Australia in
response to the Venture Capital Tax Concessions Review which
was announced as part of the Government’s Digital Economy
Strategy in the 2021–22 Federal Budget. The review focuses on
how effective VCLPs, ESVCLPs and AFOFs have been in attracting
domestic and foreign capital, developing innovation, and
expanding venture capital management skills and experience in
the domestic market. Read the submission here.
First published April, 2021
Updated February, 2022