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Over the past two years, the number of drone start-ups in California  has increased exponentially. The best example can be demonstrated by comparing last year’s Drone Market Environment Map with that of 2016. There are many more subcategories revealing that many Unmanned Aerial Vehicle (UAV) companies identified and started occupying market niches. Many business models changed or got much more specific over the last year creating exciting new concepts–both in business and in the actual vehicles.
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With the needs of drone-companies increasing and diversifying, so have the number of drone manufacturers. Drone manufacturer start-ups have reached numbers in the tens (if not hundreds) of thousands. Whether you are seeking a drone to map out fields for agricultural plotting or a drone to take a photo of your wedding from up above, there is a drone who can help. There are even window-washing drones.
And many start-up drone manufacturers are now specializing in manufacturing drones for specialized purposes. For example, a particular sub-industry needs drones that can inspect rooftops and powerlines. Not only that, but can do so during high winds and torrential rains. This niche area of drone operation is called ‘inspection and monitoring during duress’ (IMUD). These drones need to be able to operate in rain storms, high winds, snow storms, sand storms, flammable or toxic gas atmospheres, and, potentially, even fires. These drones need to be able to hold station in high winds, be waterproof, be unaffected by temperature, be resistant to abrasion, and remain unaffected by atmospheric composition. Thus, a new sub-industry is born and with it a new sub-drone manufacturing industry. These manufacturers looked to mother nature for inspiration and modeled the drone structure on certain migrating birds to develop new components on the drones. Other drone manufacturers are experimenting with GPS signals and imaging in areas of high concentrations of flammable gas or dust. And some drone manufacturers are also beginning to create sensor technologies that can use non-dispersive infra-red detectors to detect gas emissions (and even radiation leaks).

New FAA Rules in Effect

While the rapid development of this industry is as enticing and it is exciting, entrepreneurs looking to break into the market need to be aware of the new Federal Aviation Administration (FAA) Rules, known as Part 107. A summary of those rules can be found here.
These rules, which went into effect at the end of August 2016, are comprehensive regulations for routine non-recreational use of small unmanned aircraft systems (UAS) – more popularly known as “drones.” They are designed to minimize risks to other aircraft and people and property on the ground.

  • Airspace Authorization: You can fly your drone in Class G (uncontrolled) airspace without air traffic control authorization, but operations in any other airspace need air traffic approval. You must request access to controlled airspace via the electronic portal at www.faa.gov/UAS, not from individual air traffic facilities. You may submit your requests as of  today, but air traffic facilities will receive approved authorizations according to the following tentative schedule: Class D & E Surface Area – October 3, 2016; Class C – October 31, 2016; Class B – December 5, 2016. The actual time to process authorizations will vary depending on the complexity of an individual request and the volume of applications we receive. You should submit a request at least 90 days before you intend to fly in controlled airspace.
  • Aeronautical Knowledge Test. Testing centers nationwide can now administer the Aeronautical Knowledge Test required under Part 107. After you pass the test, you must complete an FAA Airman Certificate and/or Rating Application to receive your remote pilot certificate at: https://iacra.faa.gov/IACRA/Default.aspx. It may take up to 48 hours for the website to record you passed the test. The FAA expects to validate applications within 10 days. Applicants will then receive instructions for printing a temporary airman certificate, which is good for 120 days. The FAA will mail you a permanent Remote Pilot Certificate within 120 days.
  • Model Aircraft. The new regulations don’t apply to model aircraft operations that meet all the criteria specified in Section 336 of Public Law 112-95 (which is now codified in part 101), including the stipulation they be operated only for hobby or recreational purposes.

Fundamental Business Rules

Furthermore, entrepreneurs need to be aware of fundamental business rules as they look to capture a new market. For example, given the uncertainty, formation of an organized entity (versus a sole proprietorship, doing-business-as, or general partnership) is preferred, for liability reasons. Furthermore, registration with your local municipality is a must. Moreover, contracts need to be devised – both for your customers and any vendors who will be assisting you throughout the start-up process.
Finally, insurance and legal representation are equally important. Given the cutting edge technology involved, mishaps are likely. Furthermore, it is the wild west out there when it comes to business names, trademarks, as well as innovative techniques.