Announcing Our Investment in Manna

Drones as a Service for Food Delivery

Announcing Our Investment in Manna

Year end has been an eventful time for us at Dynamo, as such I’m pleased to announce our investment in Manna. We’re thrilled to partner with Bobby to make 3-minute food delivery a reality. Manna is a drone-based last mile food delivery service. Its primary clients are restaurants and franchise owners rather than end consumers. In this way, restaurants will benefit from "drones as a service" to offer a faster and cheaper first-class delivery experience for their customers.

Why did we invest?

Manna was founded by Bobby Healy—a serial entrepreneur based in Dublin, Ireland.  Although a software engineer by trade, he has taken an earnest commercial approach to this opportunity and is not necessarily seduced by the “geekery” of the technology. His first successful business was bootstrapped and his latter business, CarTrawler, is now worth over $1B having been funded by renowned private equity investors including Insight Partners and BC Partners.

While Bobby is an active angel investor, this will be his first venture-backed startup.  This is something he recognises is different from the previous businesses he operated, and he is aware of his need for "learning quickly" about this alternative approach. Bobby is exceptionally self-aware and results-driven but does not seek recognition. He is keen to learn and can adapt new concepts quickly. He is evidently a driven individual and is very much the "deal maker" but he will require high calibre individuals around him to provide industry-specific support and guidance. He has begun to assemble this roster, notably, Alan Hicks (CTO) who worked with Bobby at CarTrawler as the Head of Engineering.

The global food delivery market is estimated to be $105B which is expected to continue to grow by 9.5% CAGR to $145B by 2023. The European and UK market are estimated to be $13B and $3.5B respectively. This will be further supplemented by the emergence of dedicated kitchens for only delivery (aka "dark kitchens" or “ghost kitchens”). For the purposes of this investment, we are underwriting this as a European-centric business despite having meaningful opportunities and early traction to open in the US.

The underlying business of food delivery still has obvious hurdles to overcome. We believe that the unit economics for food delivery remains precarious despite an ever-increasing market for the convenience, as is highlighted by Doordash and Postmates’ poor underlying unit profitability. The current costs for food delivery are upward of $5 per delivery and entail mediocre service, at best. Furthermore, this sub-optimal approach has a detrimental impact on a food franchise’s carefully managed brand. Contrastingly, the projected costs for an equivalent drone delivery will be sub $1 per delivery providing sufficient room to make a healthy margin.

The current generation of drones which Manna has developed have a range of 4km (there and back) and can carry 2kg. It will drop the customer’s food from 10m using a biodegradable tether. The drones operate with triple redundancy and can fly at 75km/hr and can fly in 20 knot headwinds. The drones are battery powered and can be swapped out between flights. In aggregate, the service will reduce delivery times to a fraction of their current times.

Regulation

Clearly regulation is a foremost consideration with respect to drone delivery. It is recognized that there has historically been significant investment in this sector which has slumped due to a lack of clarity from regulators both in the US and Europe.

Much of the regulation is based upon that within aviation the tolerance of accidents is exceptionally low. Consider the number of accidents within aviation versus road transportation. In aviation, the number of incidents last year was 113, totaling 1,040 deaths. Whereas, more than 3,000 people die every single day in automotive accidents.  The overall approach is risk-based and relies heavily on flight hours and the number of accidents/incidents. Successful trials will be the key to getting approval from the regulators in Ireland (and thereby Europe) and also in the US. It is important that Manna's ensures a balance between speed and safety as it increases its flying time. It should be noted that Manna is likely to focus on suburban areas with lower population density, which the regulator will be more sympathetic towards. Dense metropolitan areas are not as practical to operate within and regulation will be much more complex.

We are excited to work with Bobby to completely replace road-based courier services and bring the future of food delivery to life. We are also glad to be joined by a great cast of participating investors including Founders Fund, Alabaster, Atlantic Bridge, ffVC, and Elkstone.

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