When Eric Peck and Josh Tepper launched Swoop Aero in 2018, they had already raised a small amount of capital from family, friends and early-stage angel investors. But as the scale of their drone supply start-up rapidly grew, they needed more. “The technology and long-term vision alignment we saw in venture capital was what drove us down that path,” Eric explains. “It wasn’t all about what the return on capital was going to be in a five-year period. It was how to build the next big company of the future. We really wanted that.”

He recalls meeting Alister Coleman, founder and managing partner of Folklore Ventures (formerly Tempus Partners), at a Startmate Sydney pitch night. Before a deal could be nailed down, however, Erick had to leave for Vanuatu where Swoop was contracted to deliver vaccines in the remote Pacific Ocean island chain. The negotiations with Folklore and Right Click Capital were finalised weeks later over a dodgy phone line to an island called Epi.

“We had to stand in one position, on a mound in a village, to get reception” - Eric Peck

“We had to stand in one position, on a mound in a village, to get reception,” Eric recalls. Alister cites another memorable Vanuatu phone call, the first Swoop Aero board meeting to be held which included Folklore and Right Click Capital. “We were ready to start, when Eric interrupted the call to tell us they had saved a woman’s life that day. She gave birth on a remote island, but there was no available clotting agent required to save her life. They got it to her in 22 minutes. The only other way was on a small speed boat which would have taken six hours. It was so satisfying to know that our investment in the company had that outcome.”

It wasn’t just the investors on a high. So too were the founders. “The ability to raise capital gave Josh and I a lot of confidence to pursue what we had started,” Eric said. “It felt like we had a couple of smart people, who surrounded themselves with other smart people who thought we were smart too. It gave us a kick. We were confident because they thought what we were doing was possible too.”

Another important boost was that Swoop also gained access to a deep pool of business expertise and experience to be tapped for advice, guidance, mentorship and to help the company develop its growth plans. On top of this, the networks of both venture capital groups opened doors to other founders that offered further networking opportunities.

Garry Visontay, founding partner at Right Click Capital, says a unique part of his business is that its directors have all been entrepreneurs. “We have all built businesses. We can bring to founders our experience and expertise. Help them through the problems that they will face and that we have faced too. It’s an operational perspective to help them sort things out.”

“We have all built businesses. We can bring to founders our experience and expertise. Help them through the problems that they will face and that we have faced too. It’s an operational perspective to help them sort things out” - Garry Visontay

Apart from both holding board seats, Right Click and Folklore cite a range of services they have brought that have eased the burden on Swoop’s founders. They range from planning and strategy to interviewing key executive hires, reviewing legal documents and advice on hiring and terminating people. “The business has grown very quickly,” Garry says. The board tends to meet quarterly not monthly, leaving the founders to work hard on productive outcomes. But the venture capital directors hold fortnightly calls with Eric to review progress and discuss any issues that he is facing. Typically, that can be issues with capital allocation, capex and decision-making discipline. In a young business such as Swoop, the job of the founders is to get things done as quickly as possible within an efficient and agile governance process.

There have now been two venture capital rounds, which Eric says has enabled Swoop to continually bring on the people they needed in the team. He believes it has helped the business to mature. “We have gone from being in a garage to now, where we lease the former GE head office in Port Melbourne. We are building aircraft using very mature manufacturing systems, a quality assurance program and, in the cloud, a full replica of the aircraft and its components. It has enabled us to build towards a solution that is very scaleable. We have not been caught out or forced to make compromises. Our system can now support thousands of aircraft in the air simultaneously across the world. The capital has enabled us to focus on that goal, and not have to make concessions that would make it hard to achieve.”

From the very start, Swoop has had a major focus on maintaining diversity in gender and experience within its team. With about 50 employees, many of the senior roles in technology and operations are held by women, including its head of business operations and chief commercial officer.

“It is clear that maintaining a broadly diverse workforce on race, gender or background is essential to being able to innovate and deliver our end result. It has definitely given us an edge in the way we develop, think and present to customers” - Eric Peck

An early criticism that Swoop received when seeking potential venture capital shareholders was their global business model. But any doubters have been proven wrong. With the onset last year of COVID, its services experienced strong demand in Africa flying medical supplies into remote villages in the Democratic Republic of Congo, Malawi and Mozambique. Typically, drones would be based at regional hospitals and fly to remote villages with medicines. On the return flight, they would carry patients’ samples and tests to be analysed and sent back on a return trip. Those services are backed by big name donors and healthcare agencies including Gates Foundation, UNICEF, the UN, USAID and UK Aid.

Most recently, Swoop has established a pilot network of flights in rural areas of Victoria with logistics suppliers, healthcare operators and the public. The work could involve up to 10 drones operating 20-50 flights a day to evaluate the potential. All going well, that could expand to hundreds of flights if commercial approval is granted. Similar services are already operating on a commercial basis in England and Scotland, taking COVID vaccines to remote areas.

The sky seems to be the limit, really. Swoop wants to establish an approved manufacturing centre in Australia to supply drones for use around the world. A new round of capital will be required to meet certification standards and to establish a next generation manufacturing centre. “This will create a regulatory and technical moat for the company,” Eric explains. “Once we get more customers, they are going to be very sticky. They won’t want to move away from us. It will be the premier service of its kind in the world.”

He sees that a local sharemarket listing could eventuate. “Our goal is to have a logistics service that reaches 100 million people by 2025, focussing on lower and mid-income countries.” The company is aiming to manufacture 1000 aircraft each year, providing them with a force of double that many craft in the air in any country at any time.

Click here to watch Swoop Aero's Chief Commercial Officer, Sabrina Ravail, reveal how the company delivered critical supplies during COVID-19.

More recently, Swoop Aero’s newly-launched, next-generation aircraft, Kite, is undergoing FAA certification, and a pilot network of flights is underway in rural Victoria that could expand to hundreds of flights when commercial approval is granted. Similar services are already operating on a commercial basis with partners in England and Scotland, taking COVID-19 vaccines to remote areas.

In September, the Australian Investment Council lodged a very important submission with the Federal Department of the Treasury and Industry Innovation and Science Australia in response to the Venture Capital Tax Concessions Review which was announced as part of the Government’s Digital Economy Strategy in the 2021–22 Federal Budget. The review focuses on how effective VCLPs, ESVCLPs and AFOFs have been in attracting domestic and foreign capital, developing innovation, and expanding venture capital management skills and experience in the domestic market. Read the submission here.

First published April, 2021
Updated February, 2022