Editor’s Brief¹

Last Week we looked at Rune Technologies and their new approach to logistics. A recent DoD investigation revealed critical shortfalls in Joint Logistics Over-the-Shore (JLOTS) operations, a little known and underfunded capability of joint logistics.

This week, we’re shifting from the back end to the front line.

Because even the most advanced autonomous drones can’t fly without batteries.

And Skydio—the U.S. drone company redefining tactical ISR—just found out what happens when your supply chain still runs through China.

As always, your feedback shapes our coverage—reply directly with insights or questions.

Signal Brief: Skydio and the Future of Sovereign Production

Skydio is defining tactical drone ops with AI-powered autonomy, allowing small units to deploy ISR in seconds. Without GPS, flight planning, or manual piloting. Their flagship defense drone, the X10D, integrates advanced sensors, edge processing, and 360° obstacle avoidance into a compact 4 lb package.

Origins & Vision

Founded in 2014 by MIT engineers Adam Bry, Abe Bachrach, and Matt Donahoe, Skydio was built on a single insight: drones could be intelligent enough to fly themselves. With early backing from Andreessen Horowitz and Accel, the team set out to eliminate pilot error and unlock new frontiers for autonomous flight.

Their debut product, the R1 (2018), was a consumer-grade autonomous camera drone featuring breakthrough “follow-me” and obstacle avoidance tech. The company was then selected by the U.S. Army in 2019 as one of the “Blue UAS” trusted vendors—offering secure, NDAA-compliant alternatives to Chinese systems.

In 2023, Skydio exited the consumer market to focus entirely on enterprise, public sector, and defense clients. That same year, it raised a $230M Series E at a $2.2 billion valuation and opened a 36,000 sq ft manufacturing facility in Hayward, California to scale production.

Stated Mission: "To make the world more productive, creative, and safe with autonomous flight."

Key Takeaways

• Blue UAS leader: First to deliver Tranche 2 drones under the Army’s Short Range Reconnaissance (SRR) program
  

• Autonomy-first design: Intelligence software comes before hardware, enabling rapid updates
  

• Contested operations: Operates without GPS and over 5G networks in denied environments

• Vertical integration: U.S.-based AI, design, and manufacturing accelerates iteration

Tech Radar:

Skydio X10D — Autonomous ISR at Squad Scale

A modular, foldable quadcopter built for low-altitude ISR in contested and GPS-denied environments.

Key Capabilities

• Visual-inertial navigation

• 360° real-time obstacle avoidance and 3D mapping

• Modular EO/IR payloads, including FLIR Boson+ thermal

• NightSense — fully autonomous flight in total darkness

• Plug-and-play comms with secure multiband radios and 5G support

Supporting Ecosystem

• Dock — Remote operation and charging from a secure base station

• 3D Scan — Generates high-resolution digital twins and orthomosaics

• Platform integrations — Real-time sync with existing command workflows

Together, these tools allow a single operator to control multiple drones across vast areas—transforming ISR at the tactical edge.

Market Signals

Funding & Growth

• Total Funding: $732 million

• Latest Round: $170 million Series E extension (Nov 2024)

• Notable Investors: Andreessen Horowitz, Linse Capital, Next47, IVP, KDDI, Playground Global, NVIDIA GPU Ventures

• Valuation: $2.2 Billion

• Annual Contract Value (estimated): $20M (2022) → $100M (2023) → $180M (2024)

Skydio currently has a robust bookings pipeline valued at $1.2 billion, with over 50% stemming from defense clients.

Contracts & Government Traction²

Skydio has secured multiple civilian and military contracts to include:

• U.S. Army SRR: Prime for Tranche 1; first to deliver Tranche 2 units

• Spain MOD: $18.7M contract for X10Ds with the Spanish Armed Forces

• Department of the Interior: Multiple FY25 contracts totaling ~$1.5M

• Department of Justice: $541,000 contract (Jan 2025) to the ATF

Skydio’s NDAA compliance and domestic production make it a trusted option for federal agencies replacing Chinese systems.

Some critics have flagged Skydio’s lobbying efforts to have the Chinese drone manufacturer DJI added to the federal “uncleared vendors” list. While the move raised eyebrows, it’s also standard practice in a defense ecosystem where nearly every prime works to shape acquisition pathways. In the end, this reflects a broader contest: not just over contracts—but over who defines trust in a contested technological landscape.

Looking Ahead

This week we aren’t focusing on exquisite cameras or AI software.  Instead? Supply chains, the invisible backbone of national security.

In October 2024, China imposed sanctions on Skydio after the company sold drones to Taiwan’s National Fire Agency. Battery exports were cut off. The result: Skydio had to ration power supplies and delay full-kit deliveries—exposing a final choke point in an otherwise U.S.-based supply chain.

But this isn’t just about one company. It’s a case study in foreign dependency. Like military logistics, the drone supply chain is a vulnerability hiding in plain sight.

Zooming out: DJI commands 80–90% of the global drone market. In 2024 alone, it shipped over 400,000 agricultural drones. Its advantages? Vertical integration, automation, and a 14,000-person workforce Western firms can’t match.

Despite halting official sales to Ukraine and Russia, DJI drones continue to appear on battlefields—repurposed for ISR, targeting, and munition delivery. These modifications aren’t DJI-sanctioned, but they demonstrate the adaptability and reach of its platforms.

Espionage concerns have long surrounded DJI.  But a 2024 independent audit by Booz Allen Hamilton found no evidence that data from the Government Edition Platform was transmitted to DJI, China, or any third party. However ownership remains a key issue. The company is privately held and several investors are state-owned asset managers aligned with the CCP’s military objectives.

All of this reinforces the core concern voiced by U.S. lawmakers: The global drone ecosystem is dangerously reliant on a single Chinese supplier.  That supplier can decide if and when to stop selling drones to anyone it wants to.

And in a Taiwan contingency, China most certainly won’t be sending drones our way.

But Taiwan also isn’t Ukraine. It’s an island fortress with layered air defenses and contested waters. FPVs that excel in trench warfare may not translate. In the Pacific, there will be no time to surge drone production.

What will matter are autonomous ISR platforms—like Skydio’s X10D and Dock—capable of silently monitoring beachheads, chokepoints, and forward positions without satellite uplinks or human pilots on call.

Skydio’s Hayward factory can build one drone every nine minutes, with surge capacity of 2,000/month—a rare Western capability. But it loses its edge if core components like batteries still come from China.

Challenges

• Scale Gap: DJI’s industrial scale outpaces Skydio, making quality + speed a difficult balancing act

• China Dependency: Batteries remain a supply chain weak link

• Theater Fit: X10D excels in land-based conflict, but its range may limit impact in maritime scenarios like Taiwan

• Competitive Pressure: Teal Drones won Tranche 2 prime; Skydio must prove superiority through delivery and performance
  

Bottom Line:

Skydio has built a resilient U.S.-based foundation—its design, software, and manufacturing are largely domestic. But it’s not yet sovereign. Components like batteries still expose it to geopolitical risk.

As the drone market races toward $101B by 2033, success won’t hinge on glossy demos—it will come down to building fast, with trusted parts, in contested conditions.

Because in this new era, production readiness isn’t just a capability.
It’s a deterrent.

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1  The views expressed in this newsletter are my own and do not represent the views of the U.S. Navy, Department of Defense, or any government agency. Mention of companies, technologies, or products is not an endorsement or recommendation. The content is for informational purposes only and should not be considered investment advice.

2  These insights are based on data organized on Pryzm, a defense market intelligence platform and CRM.