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Orb Aerospace torches its runway

Illustration: Aïda Amer/Axios

Orb Aerospace, a startup that wants to build an entirely electric vertical take-off and landing vehicle (eVTOL), has lost roughly a third of its funding in losses in the past two years, according to SEC filings. But a seed round is in the works, company founder Alex Taylor tells Axios.

Why it matters: Building highly complex eVTOLs is a capital-intensive business, and unless another tranche of financing can materialize quickly, Orb might fail to get off the ground.

Driving the news: In its annual report filed with the SEC Monday, Orb Aerospace revealed that it roughly tripled its net losses from the previous fiscal year, to $660,450.40.

  • It doubled its assets in the latest fiscal year, which closed March 31, to just over $288,000, but roughly quadrupled its long-term debt to just over $1 million, which largely represents an unannounced financing round.
  • Taylor tells Axios that the company is in the process of closing its $3 million seed funding round via convertible notes, a type of debt equity for early-stage startups.

Context: Orb, which filed under its original name, Wind Craft Aviation, was valued at $15 million per the latest funding round, according to PitchBook data.

  • The United States Air Force's AFWERX and Michigan Economic Development invested in the Michigan-based startup via development contracts, Taylor says.
  • It had previously raised $132,370 of equity crowdfunding from MicroVentures on December 7, 2020, plus $350,000 in initial capital from undisclosed angel investors. MicroVentures' earlier investment is part of the upcoming seed round, the company tells Axios.
  • On January 10, Taylor was accepted into the 2022 class of Thiel Fellows, who receive $100,000 during the two-year entrepreneurship program.

Between the lines: EV companies have struggled to maintain profitability even after becoming public companies and raising billions of dollars in private financing.

  • The same may be true of eVTOLs, a similarly promising niche within the EV industry that is still in its early stages of development. Many companies, including Orb, are building eVTOLs specifically for military uses due to their ease of maneuverability and small size.
  • Early set backs could easily derail the entire industry if investors feel the economics don't work out, as we saw recently with Amazon's write-down of its Rivian investment.

Yes, but: Tesla remains a success story in the EV industry from an investor and consumer standpoint, so it can be done.

  • Many electric transportation companies purport to be the "Tesla of X" to encourage association with the industry's biggest success, with few panning out.
  • It cannot be overstated how early some of the technology is, especially in eVTOLs. Should capital continue to flow into research and development, the path to commercialization could materialize.
  • Orb has produced five demo videos on its YouTube channel since the start of 2022, including its most recent partnership announcement with Air Race World Championships. It is not clear from the demo the specifics of the partnership, though it does promote Orb's Nomad prototype eVTOL.

The bottom line: Orb isn't generating any revenue and is running out of cash, fast. It is almost entirely dependent on closing its seed round soon.

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