Volocopter CEO Dirk Hoke recently told German media that the eVTOL developer may need to look at insolvency options, after the company failed to secure loans from the Baden-Württemberg and Bavarian states to support its electric aircraft development.
“Volocopter has been transparent that the fundraising market has been difficult in the past few years,” Hoke said. “The German federal government is still very supportive of Volocopter in receiving a convertible loan, but in general, Germany has very limited mechanisms to support startups in the late stages of financing.”
After Volocopter’s first failed attempt to secure a €100-million (US$107-million) loan that would be split equally between the company’s home state of Baden-Württemberg and the German federal government, the eVTOL startup had applied for a convertible €100-million (US$107-million) loan from the Bavarian state and federal government.
One of the conditions for a loan from the Bavarian state would be moving the company from its current Bruchsal headquarters in Baden-Württemberg to a location in Bavaria. Volocopter said any such move would happen gradually due to the logistics of moving the more than 600 employees and facilities.
A company spokesperson told Vertical that Volocopter believes the loan was, and still is, strongly supported by the federal government as it would establish Germany as an industry leader within Europe and beyond. PwC auditors carried out an extensive economic feasibility study, recommending Volocopter as a recipient of the loan to the government. However, the Bavarian state still considered the loan too risky, the company said.
Volocopter’s precarious financial position is the latest example of the funding challenges faced by startups bidding for a spot in the novel eVTOL sector. For Volocopter, though, its funding woes go back to its early days, as the company has reportedly tackled ongoing legal disputes with its Seedmatch investors.
And while investor enthusiasm for these novel vehicles helped inject public funds into eVTOL rivals like Archer, Joby and Lilium earlier in 2021, the German eVTOL developer missed out on the funding opportunity. In November 2021, Volocopter decided to back out of its planned merger with a special purpose acquisition company (SPAC), realizing what it called an “extremely unfavorable” environment for SPAC transactions by that time.
Volocopter said financial streams in Germany, as well as in Europe more generally, are lacking for startups in their late stages. Volocopter said it believes there is a need for new initiatives to help shape and support local technologies in the international arena, making note of the U.S. AFWERX Agility Prime program that supports innovation in the U.S., as well as incentives in China that help spur advanced air mobility (AAM) development in that region.
Despite these funding challenges, Hoke said the company is engaging in “good discussions with existing and new investors for alternative means of financing.” This includes looking beyond Europe for potential investors, with Volocopter claiming to have a diverse and international investor base with entities around the world.
Its investors include Saudi Arabian organization Neom, Chinese car manufacturer Geely, South Korean investor WP Investment, Italy-based Atlantia SpA, and Tokyo Century, among others.
The company had long been targeting the Paris Summer Olympics to debut its VoloCity eVTOL aircraft. Despite the funding setbacks, Volocopter said it still plans to fly in Paris, but it’s unclear what those operations will look like.
“As a company, our target for this year is very clear — to showcase our VoloCity aircraft with a summer Paris flight and to continue pushing for an EASA certification,” Hoke said.
In contrast to some of its international peers, Volocopter said it has established its production facilities without government funding.
