Jetoptera’s current priced round has a pre-money valuation of $125 million. The company has a prototype and dozens of patents, but has not yet finished its product. And it’s generated less than $50,000 in revenue thus far. Therefore, Jetoptera’s valuation is quite high. The potential return of this valuation may not warrant the risk that investors are taking. As a result, Jetoptera receives a low price score. 

Jetoptera operates in both the vertical takeoff and landing (VTOL) aircraft market and the flight propulsion system market. In 2020, the VTOL market in the US was estimated to be $1.3 billion and growing at a compound annual growth rate of 13.2%. The growth rate of VTOL aircraft is driven by rising demand in commerce, the military, and law enforcement, as VTOL aircrafts eliminate runway infrastructure without compromising speed and endurance.

The global flight propulsion system market is valued at $147 billion and is growing at a compound annual growth rate of 7%. North America accounts for 45% of the global flight propulsion system market, an estimated market value of $66 billion. 

The VTOL aircraft market is relatively small in size but is demonstrating formidable market growth. The flight propulsion system market is large and has a steady growth rate. Overall, Jetoptera receives an above-average market score.

Jetoptera CEO and CTO Andrei Evulet holds a master’s degree in propulsion system engineering from University of Politehnica of Bucharest and a PhD in mechanical and aerospace from Rutgers University. Prior to founding Jetoptera, Evulet spent 15 years at General Electric as a combustion engineer in the oil and gas division and aviation division. Evulet has received more than 50 patents and is the driving force behind Jetoptera’s technological advancements. 

Co-founder and CFO Simina Farcasiu graduated from Princeton University. Farcasiu has extensive experience in investment banking, asset management, and entrepreneurship, which is valuable for Jetoptera. But investors should note that Farcasiu is not solely dedicated to Jetoptera. She also serves as the CEO of a software company, CIO of an investment management company, and managing partner of a financial service company. So it’s unclear how involved Farcasiu is with Jetoptera. Lack of full commitment from a co-founder and CFO is often not a good sign for investors, especially when the company is valued at $125 million. 

Co-founder and board chairman Denis Dancanet graduated from the University of Pennsylvania and Carnegie Mellon University. Dancanet has extensive experience in finance and trading. In addition to his role at Jetoptera, he also serves as the president of a trading software company. However, his experience is not directly related to Jetoptera’s product development. 

Jetoptera has a strong CEO with extensive industry expertise. However, the lack of commitment and aviation-related experience from other key team members could hurt the company. Therefore, Jetoptera’s team score is about average.

Jetoptera’s key product differentiation is its proprietary Fluidic Propulsive System. This technology has received 42 patents and has 158 patents pending. Jetoptera’s aircraft is designed so that propulsion is distributed and integrated into a novel airframe. Compared to traditional turbojets, Jetoptera improves propulsive efficiency by more than 10% and lowers fuel consumption by 50%. This innovation also saves approximately 30% in weight and reduces complexity. Jetoptera has the flexibility of utilizing either gas or electricity. Most importantly, Jetoptera’s Fluidic Propulsive System allows vertical takeoff and landing, expanding the aircraft’s usage in urban environments where runways are not feasible. 

Passenger- and cargo-carrying drones pose the biggest competitive threat to Jetoptera. Drones also have the benefit of vertical takeoff and landing ability with reduced complexity. Uber is developing Uber Elevate, which is intended to function as an “air taxi” service. Boeing is designing a fully electric passenger air vehicle that has already completed early flight testing. And there are smaller independent drone companies in the market as well. However, most of Jetoptera’s competitors don’t use fluidic propulsion. This differentiation makes Jetoptera stand out. 

Although it has a number of competitors, Jetoptera holds its own ground by providing well-differentiated products with robust patent protection. Therefore, Jetoptera receives an above-average differentiator score.

Jetoptera’s current product development stage is post-prototype and pre-production. In addition to the 42 awarded patents, Jetoptera also won three military contracts, including a Cooperative Research and Development Agreement with the US Navy. Jetoptera is also partnering with GE Aviation and Honeywell, though the level of partnership is unknown.

Jetoptera’s financial statements are a little concerning. The company has generated little revenue ($39,591) and has a more than double debt-to-asset ratio, according to its Form C. Jetoptera previously raised $4.2 million, which means the company has burned close to $3 million in the past two years alone. So it might need additional fundraising to keep up with its burn rate. 

Jetoptera has made decent product development progress but has a relatively worrisome financial statement. Therefore, the company receives a slightly below-average performance score.

Jetoptera’s current round encounters product, market, time, and financial risks. The product risk lies within the company’s ability to manufacture. While the company’s product has a patented design, it’s still not clear whether the company can successfully manufacture and produce its aircraft. Market risk is caused by the fact that Jetoptera has yet to acquire approval from the Federal Aviation Administration for its product to enter the market. Time risk is associated with the market risk and product risk. It is unknown how long it will take for Jetoptera to finish production, complete regulatory requirements, and enter the market. Financial risk is due to the company’s substantial long-term debt and little revenue on its balance sheet. Therefore, Jetoptera receives a relatively high risk score.

Jetoptera raised $217,168 on MicroVentures from February to April 2020. The deal terms on that round were a convertible note with a valuation cap of $22 million and a 20% discount rate. With the convertible note from that round, investors will become equity shareholders at a valuation of $22 million in the current round. Jetoptera’s MicroVentures round received a Deal to Watch rating by the KingsCrowd investment team.  

Current round investors will have a pre-money valuation of $125 million — a 468% increase compared to the last round. Jetoptera’s revenue and key management have not changed since the last round. The major developments since the last round are prototype testing, new contracts from the US military, and new patents. It’s not clear how much progress Jetoptera has made on its prototype since the last round. The new contracts are from the US Air Force for advancing to SBIR (Small Business Innovation Research) phase II. The new patents are awarded in both the US and Japan. In addition, the propulsion systems market has grown 7% since 2020. The number of competitors has also increased.   

The KingsCrowd investment team has downgraded Jetoptera’s rating from “Deal to Watch” to “Neutral” mainly because of the company’s steep valuation increase. The progress that Jetoptera has made since its last round does not justify the five-times valuation increase. The current raise still has its advantages, though the potential return is less promising than the last round. 

Given its steep $125 million valuation, Jetoptera investors are paying a substantial premium to own a piece of the company. It is still unknown when Jetoptera will enter the market and generate significant revenue. A potentially long lead time will hinder investors’ returns. Regulatory requirements and manufacturing, which Jetoptera has yet to conquer, could also handicap the company. In addition, the lack of full-time commitment in Jetoptera’s C-suite positions does not bode well for the company. Equity investors should also note Jetoptera’s outstanding debt. In a liquidation event, debt holders will have priority over equity holders, which would make investors less likely to benefit from the business.

Jetoptera’s product stands out among its competitors. The company’s proprietary Fluidic Propulsive System has received 42 patents with 158 patents pending. Strong defensibility and a well-differentiated product design are both sustainable competitive advantages. The market that Jetoptera is operating in also has a large potential upside, as vertical takeoff and landing aircraft meet the need for short-distance air travel without runway infrastructures. In addition, mergers and acquisition events in aerospace are also expected to continuously grow. This trend bodes well for Jetoptera’s potential exit opportunities.

Jetoptera is a post-prototype, pre-production aerial mobility manufacturer. The company specializes in vertical takeoff and landing (VTOL) aircraft that utilizes a proprietary, patented technology called the Fluidic Propulsion System. Jetoptera’s unique product has won contracts and agreements with the US military. More importantly, Jetoptera is operating in a market that has large upside potential, as the demand for short-distance air travel that requires VTOL is rising. 

However, Jetoptera’s current round also draws concerns from investors. The company’s $125 million valuation is difficult to justify when Jetoptera is still in the pre-production phase. While the CEO has extensive industry expertise, other C-suite team members lack relevant experience and full-time commitment. Furthermore, Jetoptera still needs to navigate regulatory requirements and manufacturing processes. For those reasons, Jetoptera receives a Neutral rating from the KingsCrowd investment team. 

For questions regarding the KingsCrowd staff pick or ratings for this company, please reach out to support@kingscrowd.com. 

Analysis written by Zee Zhong.