A Bill Gates-backed aviation startup founder reveals how he got $21 million to build a hydrogen plane that won’t go to market for a decade

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The technology being developed by a new crop of low-to-zero emission aviation startups could change the world, but that isn’t likely to happen anytime soon. And that creates a unique challenge for these startups.

Most aviation startups, particularly the ambitious ones with the ability to make the biggest impacts, are unlikely bring their products to the market for years, even decades. They face hundreds of millions of dollars in development costs — especially those seeking to build new hardware — and a lengthy, challenging regulatory process. 

That means that investors likely won’t see a return anytime soon. And that’s enough to drive many venture capitalists away.

But increasingly, VC firms focused on the aviation space are willing to weather these challenges. And as the world focuses on reducing carbon output, some firms focused on green and ESG (environmental, social, and governance) investments are turning to aviation.

ZeroAvia is one such startup that’s dreaming big — and catching attention.

The company is working to develop a hydrogen-fueled airplane, and has already begun test flights with the hope of bringing a full-sized commercial aircraft to market by 2030. 

ZeroAvia recently completed its Series A funding, raising $21.4 million from investors including Bill Gates’ zero-emission innovation fund, Breakthrough Energy Ventures. The company also secured $16.3 million in grant funding from several institutions including the UK government.

While the funding round was successful, the reality of a delayed return on investment presented a large — and ongoing — challenge, ZeroAvia’s CEO, Val Miftakhov, told Business Insider.

“Most of the traditional Silicon Valley investors are probably too afraid to invest in something like this,” he said. “But the combination of the grand challenge and the grand prize does attract a certain type of investor.”

Despite the significant capital investments required, and the extended timeline, the potential rewards are outsized, Miftakhov said. And for funds and investors looking to play the long game, that could be irresistible.

“An even more extreme example of this are the several fusion energy companies that have attracted $100 million-plus investments,” he said. “The prize is enormous, and the challenge is equally enormous.”

“It’s a risk-rewards situation, and there are investors like Breakthrough Energy Ventures that really are looking to fund these potential breakthroughs that have a global impact on humanity,” he added. “And I think solving the aviation problem is a big prize.”

To manage the hurdle, Miftakhov has advice for both founders and investors.

“Focus on real problems for which there are no easy solutions, or alternative solutions,” he tells people looking to create a similar startup. “The harder the tech, the more protected your use case should be to be successful.”

In ZeroAvia’s case, Miftakhov thinks that hydrogen is the only practical solution to decreasing aviation’s overall emissions, which provides a degree of security. Barring unexpected scientific breakthroughs in battery density and energy storage, Miftakhov believes that hydrogen power is the only feasible option for alternative aviation — and thinks that stakeholders are beginning to agree with that.

“This is a protected application space, and that helps a lot,” he said. “That’s probably why we were able to persuade not only the investors, but the airlines and other partners, who are looking at this from the investor standpoint as well.”

For investors deciding whether a long-term project is worth betting on, Miftakhov says that the crucial due diligence is to focus on the track records of the people running the company.

“Focus on people that have demonstrated the ability to do it right,” he said. “People who actually understand the technology deeply, and drive the company to do that — I would focus on the teams that demonstrate [the] ability to actually do something, not just design great things and talk about it.”

SEE ALSO: REVEALED: How much Joby, the leading flying car startup that just acquired Uber Elevate, pays its engineers

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