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Pick a beach, park or other open area, and you might get the impression that flying drones seem to have replaced flying kites. While this is partly true, the depth and breadth of the applications of drone technology go far beyond recreation to an advancing and growing market of military and commercial uses.

From agriculture and environmental monitoring, to law enforcement and delivery services, drones are improving and expanding the efficiency and accuracy of research and commercial projects around the world in a myriad of ways. 

More and more, companies are realizing this and investing in new drone technologies. According to the Federal Aviation Administration’s 2019 Aerospace Forecast, the FAA expects the commercial drone market to triple by 2023. According to a market report published in September 2020, the global Commercial Drone market size is projected to reach $34 billion by 2026, a considerable jump from the $6 billion it racked up in 2020. 

Here’s what investors should know about drone technology and their market potential. 

What Are drones?

Drones, the more common name for Unmanned Aerial Vehicles (UAVs), are unpiloted aircraft or spacecraft. They vary in shape, size, and use. For example, some drones require a human operator, but some do not. Some drones are so small they can fit in your hand, while some are as large as traditional aircraft. 

There are three standard types of drones, including Single Rotor Helicopters, Multi-Rotor Drones, and Fixed Wing Drones. Single Rotor Helicopters look like small helicopters, and they are often used to transport heavy objects, survey land, and gather data. Multi-Rotor Drones are small and often used for photography or hobby-flying. Fixed-wing drones look like normal airplanes and run on fuel rather than electricity, allowing them to run for much longer. 

While drone applicability is expanding in the modern world in tandem with advancing drone technology, the notion of utilizing unpiloted aircraft isn’t a new one. Drones were first used in the mid-1800s when in 1849, Austria launched a balloon bomb attack on Venice. By WWII, technology had advanced to models like Austrian Jindivik, a pilotless target aircraft. 

It’s not surprising that drone technology has been advanced by militaries around the world for many years. This is in part because drones offer a range of military uses, from reconnaissance that doesn’t necessitate putting a pilot’s life at risk to offensive strikes in hard-to-reach areas. Drones also don’t require rest like their human counterparts, just enough fuel or battery power to fulfill their mission.

Drones are also playing an important role in advancing our knowledge of space. NASA’s Dragonfly mission will use a drone to sample and examine sites around Saturn’s icy moon beginning in 2026. This will be the second outer space drone mission, following the launch of a small helicopter scout as part of NASA’s Mars 2020 rover mission, expected to land in February 2021.These advanced outer space missions are not to mention that in 2019, X-37B an astronaut-free spacecraft that has clocked as many as 719 days in continuous low-earth orbit. X-37B is a reusable spacecraft that has taken five missions since 2010. 

Somewhat surprisingly, it wasn’t until 2006 that non-military, commercial  applications of drones began. Then, suddenly, their uses expanded to functions from pipeline inspections to crop evaluation to security and beyond.

Why Invest in Drones? 

In the modern world, the application of drones is exploding. And, it’s playing a role in not only the advancement of science and industry, but also real-world geopolitics.

In the ongoing conflict between Azerbaijan and Armenia over the region of Nagorno-Karabakh, for example, drones are a contentious weapon. In early October 2020, Canada boldly “suspended the sale of advanced drone optics to Turkey over allegations that the technology is being used in the conflict” to support Azerbaijan. At the end of October 2020, Armenia called for more Western nations to do the same

In Malaysia, the state of Selangor is planning drones to patrol waterways for polluters day and night, a prevalent issue that plagues the country. 

In China, the use of agricultural drones has seen a dramatic uptick, improving farming efficiency. Chinese agricultural drones can cover more than 50 to 60 times the amount of farmland that more traditional manual farm work can.

In the U.S. poultry industry, drones and robots are expected to play an increasing role in more efficient production. For example, drones can be used to spot dead birds, or even monitor the gait of birds to detect illness. Likewise, drones have the potential to administer aerosol vaccines. These applications are particularly promising considering that producers can purchase quality drones starting at only $500. 

And let’s not forget about the drone delivery of online purchases we’ve all been waiting for. 

In September 2020, Amazon.com Inc. received approval from the Federal Aviation Administration to “establish a fleet of drones” and begin testing drone deliveries. It follows companies including Uber Technologies Inc., Wing (of Google’s parent company Alphabet), and UPS. This is a long-awaited step forward after Amazon’s first announcement that it would pursue drones for delivery in 2013. 

Behind all these advances (and many more) there are numerous companies developing, manufacturing, and selling this in-demand technology. So, while the hobby-drones that we see at the park are indeed a multi-billion-dollar industry, they are the tip of an iceberg of opportunity for investors with an eye towards the future.

How to Invest in Drones

From military and defense applications, to surveying and data collection, drones are everywhere these days. That can make it challenging for investors who want to get into the space; there are just so many options out there to consider.

However, there are a number of mutual funds and ETFs that give investors access to the drone industry without having to focus on any particular companies. A search on Magnifi suggests that investors have a number of choices in this fast-growing industry.

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The information and data are as of the November 11, 2020 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi.

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