As the human population continues to grow, so does the demand for food. But land is limited, which makes increasing agricultural yield a challenge. New agricultural innovations and technology will play a key role in creating more sustainable agricultural practices.

Hylio is here to help. The company has designed drones and software, namely AgroDrones and AgroSol Ground Control software, to help eliminate human error and optimize crop yield. We reached out to one of Hylio’s four co-founders, Arthur Erickson, to learn about precision agriculture and the future role of robots in the industry.

Note: This interview was conducted over phone and email. It has been lightly edited for clarity and length.

Funding Round Details

Hylio logo
Company: Hylio
Security Type: Equity - Common
Valuation: $35,000,000
Min Investment: $200
Platform: StartEngine
Deadline: Jan 4, 2022
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Can you give us a brief elevator pitch for your company?

Hylio develops and offers innovative drone systems that completely automate precision agriculture processes. Using Hylio’s technology, farmers/producers can now apply crop treatments directly to problem areas, allowing farmers to increase yields by addressing pests and deficiencies with more accuracy and efficacy.

What inspired you to take the leap and build this company?

While doing work in Costa Rica shortly after graduating in 2017, my co-founders and I would often find ourselves in rural areas of the country, observing local agricultural processes. For example, many vital processes, such as the spraying of pesticides, were still done manually by day laborers equipped with backpack sprayer devices. From seeing these inefficiencies and having local producers/workers confirm the serious drawbacks associated with them, we realized there was a massive opportunity to improve many ag-related tasks through the use of automated UAS (unmanned aerial systems).

What past experiences prepared you to start, build, and lead your company?

My aerospace engineering studies at the University of Texas at Austin focused heavily on UAS technology and served as a strong foundation for my drone knowledge. I also worked as a researcher at the university. My work included efforts to expand the safe flight envelope of UAS through the development and deployment of Unscented Kalman Filters. Additionally, I designed and implemented methods for using UAS to monitor and predict processes that affect urban areas, such as levee flooding and traffic flow. Besides my technical background, I became very involved in the UT/Austin startup scene almost immediately after beginning my studies there. I was an active member of the Longhorn Startup Lab, which was taught and run by the founder of Capital Factory, Joshua Baer, and I also participated in other startup programs such as the Texas Venture Club.

How important is precision agriculture?

It may sound hyperbolic, but I believe the adoption of precision agriculture is a matter of life and death for our species. The world’s population is rapidly growing, and our arable land is shrinking, not growing, as more and more people begin developing housing and commercial amenities on what was previously agricultural land. In order to maintain food security for most of the world, we need to become much more efficient with what little land we have left to farm on. Precision agriculture is one of the most effective ways to do so. The focus of precision agriculture is achieving better yield results with fewer time, material, and labor costs.

What is your vision for the future of the industry you are operating in?

We envision humans working hand-in-hand with a whole host of autonomous robots that sustainably and effectively carry out the thousands of little tasks that are required for a successful crop harvest. Instead of having to perform dangerous and tedious manual tasks, farmers can focus on strategizing and making creative decisions. Agricultural workers who traditionally performed repetitive, labor-intensive roles can now focus on optimizing and innovating farming practices. We will see an exponential increase in food production worldwide from this explosion of strategic contributions that humans excel at.

Who is on your team and how did you come together?

The four founders (listed below), include myself, Nikhil Dixit, Mike Oda, and Nick Nawratil. We are all UT Austin alumni and met/formed while in school.

Arthur Erickson: CEO/Co-founder

Arthur’s intense interest in UAS began when he was studying aerospace engineering at the University of Texas at Austin. While studying, he worked with a research team at UT to deploy drones for disaster prediction/response and transportation optimization. Recognizing the enormous potential of UAS technology, Arthur and some other UT alumni decided to form Hylio in 2015. In 2017, Arthur applied his experience and passion for UAS by leading Hylio’s parcel delivery project in Costa Rica alongside on-demand delivery startup, GoPato. Now Arthur leverages his technical and management experience to lead Hylio as it revolutionizes the global ag sector.

Nikhil Dixit: CTO/Co-founder

Nikhil received dual degrees in electrical engineering and computer science from the University of Texas at Austin and went on to receive a master’s in computer architecture from UT as well. Nikhil’s passion for technology began at a very young age, and he began to seriously experiment with UAS software and hardware design while at UT. Nikhil has deep industry experience from his time working as a project leader on artificial intelligence at Nvidia. Since forming Hylio with UT alumni in 2015, Nikhil leads a team of developers and engineers to create game-changing UAS technology for the ag sector.

Mike Oda: CFO/Co-founder

When he was just 15 years old, Mike Oda began managing many of his family’s businesses, including wholesale import and distribution of engineering products, a housing development, and Wagyu cattle ranch. While juggling those responsibilities, he received a degree in finance from the UT Austin McCombs school of business. He formed Hylio alongside fellow UT alumni in 2015 and now applies his wealth of finance knowledge and business management experience to the company as it explosively grows.

Nick Nawratil: COO/Co-founder

Nick Nawratil first began working with UAS when he was studying aerospace engineering at UT Austin. While studying, he started and managed a utilities installation company that serviced the greater Austin area. Nick joined Hylio in 2017 and manages the distribution and production of its technology while also being heavily involved in the product design and implementation.

Do you have any competition, if so, how do you differentiate?

Given how new this industry is, there are relatively few competitors. I will break them down into a few generalized categories:

  1. Foreign offerings (primarily China-based). This includes companies such as DJI, XAG, and TTA-Aviation. These are all foreign-based manufacturers that do have infrastructure to offer low-cost hardware en masse, but they don’t have the product-market fit or innovative tech offerings that a lean, super-focused startup like Hylio has.
  2. US-based distributors/resellers of third-party spray drones. This includes companies like Rantizo and HSE-UAV. These companies are essentially leveraging/reselling off-the-shelf products in various ways. The key difference between them and Hylio is that they don’t create/own the technology IP. Instead of competitors, we view these as potential customers.

What does your business model look like?

Upfront Purchase: Hylio offers full-stack UAS solutions that are ready to work right out of the box. Thanks to our streamlined manufacturing processes, we can offer competitive pricing on these packages while retaining strong margins for our company. These margins fuel our growth and allow us to maintain our excellent technical support infrastructure. With the upfront purchase of our system, the customer gains lifetime access to our basic AgroSol Ground Control software, but they can also access premium features through tiers of subscription fees. Hylio plans to secure financing and leasing arrangements in order to offer customers more flexibility in their payment methods. Our UAS kits include everything the customer needs to put the system to work immediately. This includes the aircraft, batteries, chargers, ground station components, tools, and a 1-year manufacturer warranty. Every one of our customers has access to unlimited remote technical support and we offer fast, effective, and affordable physical servicing when needed.

RaaS: We have begun implementing a RaaS lease-style model in order to further increase the accessibility of our products and widen our market penetration. Our backend is able to track usage of our machines which enables us to intelligently bill customers; they pay more when they use it more and vice versa. This can be useful for customers that prefer operating expenses over capital assets or those that have an acute, short-term need for our solutions. As Hylio’s infrastructure expands, we will be able to field a larger fleet of UAS for the RaaS-style offering. Pay rates will vary depending on which model(s) the client is utilizing and which additional software features the client chooses to access.

SaaS: We will soon launch optional, recurring software services that current and future customers can access to enhance their operations. Both customers that purchase upfront and those on the RaaS model can access these subscription software services.

What brought you to equity crowdfunding and how do you intend to use the money you raise this round to scale the business?

Hylio already has industry-leading tech, but a significant amount of the funds we raise will go right back into cutting-edge R&D so that we not only maintain but increase the lead we have in our field. We plan on investing heavily into further development of artificial intelligence for crop analysis applications, automated equipment for recharging and refilling our spray drones, and powerful, predictive data tools for farmers. 

A fair amount of the funds will also be utilized to explosively grow our company’s footprint in the US and Latin America. We are already seeing overwhelming demand for our products, and we are now in the process of scaling up our manufacturing chain and our logistics in order to provide more products and services to our customers, faster. By setting up our own distribution/repair centers, along with a robust third-party reseller network, we can effectively reach millions of producers in the coming years.

What do you want potential investors to know about you and/or your company?

Generally speaking, I would say that the agriculture sector is easily overlooked and underrated by many tech/startup investors. The majority of startup hubs (such as Silicon Valley and New York) are urban areas that typically don’t interact with or focus on the agricultural sector and are thus, in my opinion, ignoring a massive opportunity. I’d like to remind potential investors that while ag discussions aren’t always making the front page (because people take it for granted), the ag market is huge. The global ag market is worth $2.4 trillion. Due to this perpetual underrating of the industry, I personally believe investments in agtech have an even greater chance of making a huge splash, both in terms of financial ROI and impact. I encourage potential investors to do a little homework on the ag industry. Learn how our food is made and how it gets to your table, and then, hopefully, you’ll come to realize how many opportunities there are in the space.

As you think about the business 5-10 years down the road, what do you see exit opportunities looking like? Have you set any future goals for the company?

Most likely, Hylio will see an exit in five to 10 years in the form of an acquisition or merger with a larger ag company. There are several big players in the agtech space that are viable options for a Hylio exit. For example, John Deere has been aggressively acquiring Agtech companies for the past decade or so. One of the more notable instances was John Deere’s 2017 acquisition of Blue River Technology. John Deere then took BRT’s plant identification and precision spraying tech and incorporated it widely across the JD sprayer products (what JD now calls “See & Spray”). Hylio is uniquely positioned with powerful, hard-to-replicate technology that players like John Deere would find intensely valuable. Most of the large agtech companies like John Deere, Bayer, and Corteva have already shown keen interest in UAS technology for crop scouting and treatment.

A public offering is also not out of the question. AgEagle’s (ticker UAVS) relatively recent IPO has shown that startups in the drone agtech space can achieve significant success with public offerings. Depending on market conditions, Hylio may opt for a similar route in five to 10 years’ time.

Ultimately, Hylio will continue to make the decisions that we believe will have the most revolutionary, and thus valuable, impact on the global agricultural economy. We’ll continue to prioritize industry-leading innovation and customer offerings, and once we’ve reached a point where we believe that an exit would be optimal for the future of the company and its shareholders, then we will proceed accordingly. 

We at KingsCrowd are excited to see where Arthur and his team take the company. Hylio is currently raising on StartEngine.