Zipline closed $1.5 billion of fresh funding, valuing the drone delivery and logistics startup at $21.5 billion as it expands a commercial partnership with Walmart Inc.
The round was led by venture capital firm Paradigm and WCM Investment Management, with participation from JPMorgan Chase & Co. funds. Bloomberg in September reported talks for the round and Zipline’s target valuation.
Walmart is expanding its commercial relationship with Zipline, adding 300 new sites where the startup’s drones can deliver Walmart orders and packages weighing as much as 8 pounds within 30 minutes. The multiyear agreement also allows for more sites, based on performance. Zipline and Walmart currently have 21 sites in Texas and Arkansas.
“I think both we and they have been quite startled by the level of customer demand,” Zipline founder and Chief Executive Officer Keller Cliffton said in a Bloomberg Television interview. “We are going to expand to every metro and then eventually every home in the US.”
Founded in 2014, the South San Francisco-based company is one of the world’s largest drone delivery operators, using autonomous aircraft to move everything from medical supplies to restaurant orders. It began delivering blood to hospitals in Rwanda and has since expanded in the US to consumer delivery across groceries and food, working with customers including Walmart, Chipotle Mexican Grill Inc. and Uber Technologies Inc.
Zipline operates two drone systems: a long-range aircraft that parachutes packages to the ground and a quieter, short-range drone that lowers home deliveries by tether.
Because US regulations limited the use of drones commercially, Zipline focused its earlier efforts in Africa with the longer-range fixed wing version, a business that is now cash flow-positive, Cliffton said.
“When we started the company, this was illegal in the US. Which made it pretty hard to raise capital,” he said. “But the advantage of that is we were able to spend a lot of time getting the system to a place where it is reliable, safe, where it is unit-economic.”
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