Financial markets may be taking a clobbering but it’s not all doom and gloom with some investments still going ahead. Lilium, the German start-up developing flying taxis, has closed a $240 million funding round, with the cash raised from current investors. The investment was led by Chinese tech giant Tencent and the money will be directed towards the set-up of large-scale production facilities for the five-seater electric aircraft Lilium hopes to offer as an airborne inter-city shuttle service.
All being well, Lilium’s small all-electric aircraft, which is powered by 36 fans, should be providing commercial services to passengers by 2025. Lilium had hoped to raise a total of $500 million but a combination of investors becoming more conservative after high profile problems at heavily funded start-ups such as WeWork and the coronavirus pandemic mean just under half that target was achieved. However, against the current backdrop, banking $240 million has to be considered a major success.
Co-founder and CEO Daniel Wiegand commented:
“We are super happy that we were able to close this round at the beginning of this crisis.”
The funds brought in will keep Lilium moving forward for at least a year, by which point CFO Christopher Delbrück hopes to be able to attract new investors into the next funding round.
“We took what we thought was good funding right now with a number of investors who know us very well.”
The start-up, established by four engineers in 2015, has now raised a total of $340 million and, as of the latest funding, has a valuation estimated at somewhere between $750 million and $1 billion. The start-ups founders are also still the company’s largest shareholders, but now no longer hold an equity majority.
Lilium’s market is on-demand flying taxi services between regional cities and is forecast by Morgan Stanley to be worth around $1.5 trillion a year by 2040. There is, however, competition. Toyota invested almost $400 million in Joby, a Californian flying taxi start-up, earlier this year.
There is a significant difference in the designs of the electric aircraft the two start-ups are building. Lilium’s approach is a vehicle with fixed wings. The rotor fans allow for vertical take-off and landing by adjusting to point down before changing position to propel the aircraft forward during flight. The extended wings offer extra lift, which gives the electric battery charge that powers it a range of up to 300km. Joby’s aircraft design is more like a helicopter, or giant drone. That requires more energy and its current range is shorter as a result.
Lilium hopes to be producing aircraft that can be certified for licensing as commercial air taxis by 2023, by which point urban air travel regulations should have been established. If that timescale is kept to, the start-up plans to be operating an on-demand taxi service in a number of regions by 2025. The company plans to hire commercial pilots for its first services, though would then hope to be able to train its own.