Zipline Tops $21 Billion Valuation, Adds 300 Walmart Drone Sites

Zipline closed $1.5 billion of fresh funding, valuing the drone delivery and logistics startup at $21.5 billion as it expands a commercial partnership with Walmart Inc.

The round was led by venture capital firm Paradigm and WCM Investment Management, with participation from JPMorgan Chase & Co. funds. Bloomberg in September reported talks for the round and Zipline’s target valuation.

Walmart is expanding its commercial relationship with Zipline, adding 300 new sites where the startup’s drones can deliver Walmart orders and packages weighing as much as 8 pounds within 30 minutes. The multiyear agreement also allows for more sites, based on performance. Zipline and Walmart currently have 21 sites in Texas and Arkansas.

“I think both we and they have been quite startled by the level of customer demand,” Zipline founder and Chief Executive Officer Keller Cliffton said in a Bloomberg Television interview. “We are going to expand to every metro and then eventually every home in the US.”

Founded in 2014, the South San Francisco-based company is one of the world’s largest drone delivery operators, using autonomous aircraft to move everything from medical supplies to restaurant orders. It began delivering blood to hospitals in Rwanda and has since expanded in the US to consumer delivery across groceries and food, working with customers including Walmart, Chipotle Mexican Grill Inc. and Uber Technologies Inc.

Zipline operates two drone systems: a long-range aircraft that parachutes packages to the ground and a quieter, short-range drone that lowers home deliveries by tether.

Because US regulations limited the use of drones commercially, Zipline focused its earlier efforts in Africa with the longer-range fixed wing version, a business that is now cash flow-positive, Cliffton said.

“When we started the company, this was illegal in the US. Which made it pretty hard to raise capital,” he said. “But the advantage of that is we were able to spend a lot of time getting the system to a place where it is reliable, safe, where it is unit-economic.”

In January, Zipline raised more than $600 million at a valuation of $7.6 billion, as investors projected confidence in its ability to scale and commercialize its operations.

The startup will use the funds from the latest round to expand its manufacturing facility near San Francisco International Airport from its current annual capacity of as many as 20,000 aircraft. Zipline will also hire across the US to support the Walmart expansion and its own operations.

In the Dallas-Fort Worth area of Texas, the company’s drones have made more than one million deliveries this year.

As part of an aggressive push into food delivery, Zipline in August partnered with Uber and is targeting a million daily deliveries with the company by 2029.

Zipline is also working directly with about 400 restaurants in Texas and Arkansas, according to the company, and is adding more than 100 monthly. Restaurants using its drones saw delivery sales rise 26%, and most of that growth came from new Zipline orders rather than customers switching from other delivery apps, the startup said.

“We see customers try drone delivery for the novelty and then continue to come back to it for the convenience when they need something in minutes,” Greg Cathey, Walmart’s senior vice president for e-commerce fulfillment transformation, said in a statement.

Walmart also operates drone deliveries with Wing, owned by Google-parent Alphabet Inc.