Following a boom of cleaner aviation start-ups riding waves of easy money, some advanced aircraft developers now confront a far bleaker investment landscape.
Eric Lithun, founder and chief executive of Norwegian start-up Elfly Group, described to FlightGlobal during last month’s Farnborough air show the difficulty of securing enough cash to push his company’s all-electric Noemi seaplane over remaining development and certification hurdles.
Lithun met with conventional seaplane operators at the show to pitch the capabilities of Elfly’s proposed aircraft, while also courting potential suppliers – and continuing his search for deep-pocketed investors.
To his frustration, a general lack of familiarity with seaplanes seemingly holds back some investors who “don’t really get” the project, Lithun says. Once, describing Noemi’s amphibious capabilities to a potential investor, he was asked why Elfly didn’t “just develop a normal plane”.
“We talk to some investors and they say, ‘Eric, seaplanes are a niche.’ And then I say, ‘Yeah, but it’s an existing niche.’”
Though struggling to raise additional capital, Elfly has a long runway, according to Lithun. The project is mostly self-funded, as he previously owned and sold an information technology start-up. It also has support from the Research Council of Norway.
Lack of major outside investment will likely delay assembly of the first full-scale Noemi prototype, however. The aircraft will not be completed in 2026 – Elfly’s previously stated goal – as it takes a more conservative approach than anticipated. The concept is not yet ready for a “critical design review”, Lithun says.
“The other reason is that I’m the main investor at the moment,” he adds. “We have the Norwegian government’s support with soft funding, but I would like to have some investors also coming on board. We were supposed to be at that point now, and we’re not.”
First flight of the full-size Noemi prototype has been pushed back to 2027 at the earliest, Lithun says, “unless somebody calls me and says, ’Here is a pile of cash’”.
“I mean, if nobody wants to invest and we don’t get the cash, then you have to wrap up at some point, right?” Lithun acknowledges. “I still have complete faith in my bet and my energy in getting this running. I think it will work.”
LONGER HORIZON
Noemi is to be a twin-motor aircraft powered by lithium batteries and an electric powerplant, with an airframe that evokes familiar seaplane designs. It is intended to carry up to 13 passengers and to be modified for various missions.
“It is a flying boat much like a [Grumman G-73] Mallard, and it has some of the features of the [De Havilland Canada DHC-6] Twin Otter,” Lithun told FlightGlobal during the 2023 Paris air show in Le Bourget.
The start-up is targeting a range of 108nm (200km), with fjord-hopping and inter-island missions in mind. It is considering potential operations in coastal communities in Norway, Denmark, Canada, Japan, the UK and the USA.
LIthun points to New York, Vancouver and Seattle in North America, as well as the Maldives, as areas with established seaplane markets.
Copenhagen is a clear landing place for Noemi, Lithun says. The company also has a deal with the government of Gotland, Sweden – in the Baltic Sea off Sweden’s east coast – to explore operations for a community that historically has depended on ferries and aircraft for transit and tourism.
But Elfly is unlikely to launch passenger-carrying flights this decade.
Bergen-headquartered Elfy is building its third-generation drone – a 20% scale model of Noemi – intended to demonstrate the aircraft’s flight characteristics without the high cost of developing a full-scale prototype.
The company recently moved into a facility at Sandefjord airport in Torp, Norway, and now has a 20-strong engineering team. With backgrounds at Airbus, Pilatus and Honda Aircraft, Elfly’s engineers have been influencing the development of Noemi’s final production design.
“When people come on board that have a lot of experience from other programmes, they give us input and knowledge and then we are doing some redesigns,” Lithun says. “We’re not changing the Noemi plane completely, but we are going to build a conceptual prototype first – not a conforming model. When you get more engineers on board, you need to take that knowledge and incorporate it.”
Lithun says that the programme is still in a phase where adjusting the concept is relatively inexpensive. He would like to avoid taking the path of the US start-up Eviation, which has made major design changes to its electric commuter aircraft, Alice, following a lone test flight in September 2022.
“Building a complete plane, flying it for 8min and then saying ‘I would probably never fly it again’, that’s a lot of wasted money – and that’s what I’m trying to avoid,” he says.
“I want to build a conceptual prototype and fly it a lot.”
INVESTMENT WAVE SLOWS
Sky-high development costs are a significant barrier for any airframer proposing a clean-sheet aircraft design.
But venture capital has been notably scarce following the post-pandemic boom of 2021, with rising interest rates and broad geopolitical tensions likely contributing to the pullback. Meanwhile, some low-emissions aviation start-ups have been struggling to attract the capital necessary to get off the ground.
In June, now-defunct US advanced propulsion developer Universal Hydrogen disclosed that it had burned through its cash reserves and folded as a company. Mark Cousin, Universal Hydrogen’s chief executive and board chairman, told FlightGlobal that the decision was driven by the failure to close “any new investment”.
”While we have been pursuing new capital for some time, and evaluating various strategic options, we have been unsuccessful,” he says.
In another recent blow to aviation start-ups, California-based high-performance battery maker Cuberg ceased operations as publicly traded parent company Northvolt moved to centralise its lithium-metal battery research and development in Sweden. Whether Cuberg’s financial position contributed to Northvolt’s decision is unclear.
Elfly has previously estimated that producing the aircraft’s first prototype will cost roughly €20 million ($22.5 million), and that the entire development programme could cost up to €200 million.
Lithun is wary of ramping the programme too quickly and burning through cash reserves before reaching market.
“We’re in a lucky position to be funded for a long time, but if we scale up then we have to be careful about stuff,” he says. “That is why I think it will be better to be a bit slow and still reach the target of 2030 commercial operations.”
