Propulsion systems and Vertical and Short Takeoff and Landing Aircraft
Minimum Investment: $100
Building a robust intellectual property portfolio with multiple granted patents, as well as numerous patent applications globally
Partnerships with the U.S. Navy and General Electric (GE) Aviation
Finalists in the AUVSI Xponential Startup Showdown in May 2018i and the Starburst Accelerator at Google Wing in December 2018
Featured in the Dubai Airshow in November 2019ii
Seattle-based Jetoptera is a startup that is aiming to be the aerial mobility company of the future. To accomplish this goal, the company is relying on its unique fluidic propulsive system integrated with a novel airframe which was engineered to facilitate a faster, simpler, quieter, and more compact aircraft capable of vertical and short takeoff and landing. Founded in 2015, Jetoptera has achieved numerous milestones since inception, including:
Security Type: Crowd Note
Round Size: Min: $25,000 Max: $1,070,000
Discount Rate: 20%
Valuation Cap: $22 million or $24 million
Conversion Provisions: In connection with equity financing of at least $1 million, the Company has the option to convert the Crowd Note into non-voting preferred stock (Conversion Shares) at a price based on the lower of (A) a 20% discount to the price per share for Preferred Stock by investors in the Qualified Equity Financing or (B) the price per share paid on a $24 million valuation cap. Please refer to the Crowd Note for a complete description of the terms of the Crowd Note, including the conversion provisions.
Transaction Type: Primary
Investors that purchase the first 50,000 Crowd Notes, and thereby fund the first $50,000, will receive Crowd Notes with a conversion provision based on a $22 million valuation cap instead of a $24 million valuation cap. That means, in connection with equity financing of at least $1 million, the company has the option to convert the Crowd Note into non-voting preferred shares (Conversion Shares) at a price based on the lower of (A) a 20% discount to the price per share paid for Preferred Shares by investors in the Qualified Equity Financing or (B) the price per share based on a $22 million valuation cap (instead of $24 million).
The aviation industry is a multi-hundred-billion-dollar industryv with many companies developing new technologies and aircraft to help move people, cargo, and perform other functions more efficiently.vi Legacy technologies and aircrafts tend to be viewed as inefficient, large, loud, and don’t cater to the emergent desire to be runway independent,vii as well as being expensive.viii Helicopters, for example, are loud, slow, and have a large footprint. The extent of such challenges isn’t limited to commercial environments, but military organizations as well.ix Defense agencies rely on aircraft to perform transport, intelligence, surveillance and reconnaissance, strike operations, communications, and earth observation, among other functions.x
Jetoptera designs propulsion systems, unmanned autonomous vehicles, and flying cars for military and commercial markets. Potential applications for the company’s product include military, emergency situations like search and rescue or relief and humanitarian supply efforts, inspections, mapping, logistics, general aviation, and urban air mobility. The company has developed a unique propulsion system and novel airframe to create an aircraft that is efficient, light, and less complex and capable of vertical and short takeoff and landing. Jetoptera was founded in 2015 by an experienced team of Andrei Evulet, Denis Dancanet, and Simina Farcasiu. The founders have significant experience in aerospace, Wall Street, and startup environments. This experienced team has helped Jetoptera already gain support within the U.S. Navy and General Electric, as it looks to become a leader in aerial mobility.
Jetoptera’s innovation is the Fluidic Propulsive System (FPS), a unique propulsion system engineered for vertical and short takeoff and landing applications. Additionally, the company has developed a novel integration of propulsion and airframe for a more compact, faster, and more efficient aircraft. Jetoptera’s inventions have been demonstrated in static, wind tunnel, and flight tests. The FPS needs a source of compressed air, which is then passed through thrusters. The company’s technology allows this thrust to be augmented, by entraining massive amounts of ambient air. The shape of the airframe and its integration with the propulsion allows for the entrained air to hit lift-generating surfaces, resulting in lift augmentation. The thrusters can be given non-round shapes, which allows them to conform to wings, to facilitate an increase in lift coefficient and better short takeoff performance.
Fluidic Propulsive System VTOL configuration
Fluidic Propulsive System STOL configuration
The company notes the following advantages of fluidic propulsion:
Jetoptera is designing a range of fluidic propulsive systems, unmanned, and manned aircrafts with both vertical and short-takeoff and landing capabilities. Here is brief description of each category:
In addition to its fluidic propulsive system and FPS-equipped aircraft, the company offers one jet-turbine equipped aircraft, the J-55. This STOL aircraft is smaller than Jetoptera’s future offerings (it weights under 55 lbs) and has reached 250 mph in flight tests. This product has served as a good proof of concept for Jetoptera, as well as potential future partners. It is the subject of the company’s cooperative research and development agreement with the US Navy.
The table below shows Jetoptera’s expected future FPS lineup. Because the FPS is scalable, one can match it with turbo-compressors of different sizes. The resulting thrust is magnified by the thrust augmentation of the FPS. For VTOL applications, one needs enough thrust to lift the entire weight of the aircraft and some extra 10% to generate upward momentum and account for conditions (altitude, climate, etc.). For STOL applications, one needs to match only a fraction of the entire weight of the aircraft, as it will generate some lift before takeoff. The thrust is a range because it varies with FPS options and aircraft mission. Maximum thrust is achieved on takeoff, in static conditions. One can use multiple compressors in one aircraft in order to generate extra power or to provide redundancy. For example, the J-4000 could be powered by a single FPS-5000 sized system or two FPS-3000 sized compressors.
Estimates for weights are based on existing similar turboshaft engines adapted to become turbo-compressors and FPS designs matching the respective power. For example, a 2000 kW helicopter engine such as the GE YT706-GE-700 produces 2000 kW and weighs under 550 lbs (CT7-8 dry weight is 540 lbs).xi
Jetoptera’s anticipated future VTOL products include:
Payload: 25-50 lbs
Range: 100-150 mi
Speed: 200 mph
Target Release Date: 2020
Payload: 100-220 lbs
Range: 150-200 mi
Speed: 200 mph
Target Release Date: 2021
Payload: 450-800 lbs
Range: 200 mi
Speed: 200 mph
Target Release Date: 2023
Payload: 450-800 lbs
Range: 400 mi
Speed: 400 mph
Target Release Date: 2024
Jetoptera’s expected STOL aircrafts include:
Payload: 200 lbs
Range: 500 mi
Speed: 120 mph
Target Release Date: 2021
Payload: 1,100 lbs
Range: 1,100 mi
Speed: 135 mph
Target Release Date: 2022
Payload: 2,000 lbs
Range: 1,200 mi
Speed: 145 mph
Target Release Date: 2023
Jetoptera is investing in building out a robust intellectual property portfolio both domestically and internationally. In the U.S., the company has three granted utility patents (U.S. 10,207,812, 10,464,668, 10,501,197), several utility patents for which a notice of allowance has been received, three granted design patents (D 856,898, 856,899, 868,627), as well as numerous applications. The company also has several utility and design patents that are currently unpublished. Internationally, the company has dozens of applications and multiple granted design patents. The company is aiming to develop a patent portfolio that is tailored to cover all key aspects of its products and technology.
If the minimum amount is raised ($25,000), Jetoptera intends to allocate half the proceeds towards general marketing and the remaining half towards legal expenses.
If the maximum amount is raised ($1.07 million), Jetoptera intends to allocate about 46% towards research and development. Future wages (~23%), legal expenses (~23%), and marketing (~6%) are the remaining functions the company is projecting to direct the proceeds of the raise toward. Jetoptera has discretion to alter the use of proceeds from this raise.
The company anticipates allocating funds towards the following functions within each category:
Jetoptera is currently pre-revenue, however, the company expects to generate future revenue through multiple channels.
To date, Jetoptera has entered into two significant partnerships with the U.S. Navy and General Electric (GE) Aviation that are testing the company’s product. Details about each partnership are as follows:
Jetoptera is building a pilot test that incorporates its fluidic propulsion solution on a modified General Electric engine. The test is planned to happen in 2020 and will be in the Czech Republic (where GE Aviation’s turboprop engines are built).
Jetoptera has a cooperative research and development agreement (CRADA) with the U.S. Navy to fly payloads for the organization.
Jetoptera has also been featured in trade shows and industry events globally. In May 2018, the company was one of five finalists for the AUVSI Xponential Startup Showdown.xii In December 2018, the company was one of ten finalists chosen to present at the Starburst Accelerator Selection Committee at Google Wing. Most recently, the company was featured at the Dubai Airshow in November 2019.xiii
Jetoptera has generated no revenue to date, as it has predominately focused on product development, intellectual property portfolio development, and establishing pilot partnerships. The company hopes to begin generating revenue in 2020 via government contract awards, licensing of its propulsion system and airframe, and aircraft sales to military organizations.
In 2019, Jetoptera has incurred about $1.92 million in expenses, up 39% compared to 2018. Expenses dipped slightly in Q3 2019 due to lower spending on prototype and equipment expenses relative to the other quarters. In 2018, the company incurred nearly $1.6 million in expenses, with expenses significantly dropping in Q4 2018 because of lower legal fees related to patent filings and protection. In 2017, Jetoptera incurred about $1.11 million in expenses, down from about $1.28 million in 2016. The company sustained nearly $300,000 in expenses in 2015, its first year of operation.
In 2019, expenses have mainly gone towards professional services, which includes legal and accounting fees, website development, and any other outsourced professional services. Equipment has accounted for about 22% of total expenses in 2019, with expenses in this category including production and equipment related to prototyping. The remaining expenses were allocated toward wages for the employees, research and development for Jetoptera’s aircrafts, advertising, office rent, and general and administrative expenses towards running the business.
The full breakdown for expenses in 2019 is as follows:
The full breakdown for expenses in 2018 is as follows:
The full breakdown for expenses in 2017 is as follows:
In 2019, Jetoptera has incurred a net operating loss of about $1.92 million compared to nearly $1.6 million in 2018. In 2017, the company experienced a net loss of $1.11 million, an improvement from a net loss of $1.27 million in 2016. In its first year of operation, the company incurred a net loss of about $297,000. In 2019, the company’s gross average monthly burn rate was about $160,000, compared about $132,000 in 2018. As of February, the company had about $391,000 in cash assets, with the founders and executive team committed to supporting the company throughout the duration of the Offering.
The general aviation industry includes over 446,000 aircraft flying worldwide, with over 211,000 of these aircraft based in the U.S. These aircraft range from two-seat training aircraft and utility helicopters, to business jets. The aviation industry supports $219 billion in total economic output and over one million total jobs in the U.S.xiv
Drones – broadly defined as any kind of unmanned aerial vehicle – is one segment of aviation that has grown in demand by stakeholders in various industries. Goldman Sachs projects a $100 billion market opportunity for drones in 2020. The military is the largest section of this market, with projections reaching $70 billion by 2020. Drones have already gained acceptance within the defense industry in part because they are safer, cheaper, and often more capable alternatives to manned aircraft. Military personnel work with drones of many sizes from small quadcopters that can be as small as 6.5 inches in size, to large jet-sized aircraft. The next generation of military drones are expected to have even greater stealth, sensory, payload, range, autonomous, and communications capabilities.xv
The next largest market is the consumer drone market, which is forecast to reach $17 billion by 2020. The consumer market was the first segment to develop outside the military industry. The fastest growing segment of the drone industry is the commercial and civil segment, which Goldman Sachs projects to reach $13 billion by 2020. Drones are able to serve many functions within this market segment including agriculture, first responders, climate data, construction, and border management.xvi
Urban air mobility is another segment of the aviation industry that has gained attention from technology companies like Uber.xvii Morgan Stanley Research believes there are many different use cases for urban air flight including logistics, package delivery, personal travel, and more. Technology is not projected to be a limitation for the industry, but rather regulatory and societal concerns surrounding urban air mobility. Understandably, addressing safety will be at the forefront of regulators’ list.xviii
Accessing adequate health care can be a challenge for people living in rural areas, but the development of drone technology has the potential to improve care. Rural areas often have fewer specialists, hospitals, and other providers, requiring people to drive long distances to receive the care they require. This can have a significant impact on elderly citizens who no longer drive and lack access to alternative forms of transportation. According to research conducted at Texas A&M University, drones could help solve this problem by offering access to important services that do not require face-to-face interaction. In the same research paper, testing showed that using drones could provide cost and time savings for patients, and improved care delivery for providers.xix
Aircraft that operate within these markets can be identified by many identifying characteristics. One such characteristic that classifies many aircraft is their takeoff capabilities. Vertical Takeoff and Landing (VTOL) aircraft are vehicles that can take off, land, and hover vertically. Unlike airplanes, which accumulate speed on the ground before launching in the air, VTOL aircrafts can become aerial without this mechanism. Short Takeoff and Landing (STOL) aircraft have short runway requirements for takeoff and landing before they are able to become airborne. Partly due to their shorter requirements to gain speed on the ground, STOL aircraft can be used on unimproved runways.
Highlights from venture financings in aviation companies from 2009-2019 include:xx
Source: PItchBook Data, Inc.
Source: PItchBook Data, Inc.
Given Jetoptera’s technology and business model, there are several areas in which to consider the competition: propulsion, unmanned, and manned aircraft. In the area of propulsion, the Company’s primary competitors are electric and hybrid electric approaches using batteries, electric motors and many propellers. In the area of unmanned aircraft, the Company’s competitors include defense aerospace companies, such as Kratos. In the area of manned aircraft, among the Company’s competitors are eVTOL companies such as Volocopter, Lilium, and Kittyhawk.
Volocopter is a German company that is developing electric takeoff and landing aircrafts for urban environments. The company is focused on commercial applications of it technology, which has been trialed and iterated upon since the company’s founding in 2011. In 2019, Volocopter announced a partnership with the city of Singapore, in which Volocopter would develop a prototype air taxi landing facility. To date, Volocopter has raised about $89 million, with the company raising a $55 million Series C in September 2019.xxi
Founded in 2015, Lilium is an aerospace company that is focusing on developing urban electric vertical takeoff and landing aircrafts. The company’s mission is to make urban air mobility more accessible for the masses, with the Lilium Jet designed to connect not only urban and suburban areas, but cities to one another. Lilium has raised over $100 million from Tencent, Atomico, and Obvious Ventures, among other firms. TechCrunch reported in October 2019 that the company had begun engaging investors to raise a larger round of financing, between $400 million and $500 million.xxii
Kitty Hawk is a Mountain View-based startup that has developed the Heavyside and Flyer aircrafts for personal aviation. The Heaviside is the company’s latest product, which is designed to be fast, small, and quiet with Kitty Hawks estimating the aircraft can travel from San Jose to San Francisco in 15 minutes.xxiv The Flyer is powered by ten independent lift fans, can hold one person, and operates between three and ten feet off the water.xxv In December 2019, Forbes reported that the Larry Page-backed Kitty Hawk decided to not sell the Flyer to individuals and that it had returned deposits to buyers. Additionally, former employees claimed that the Flyer was having frequent breakdowns and fires.xxvi
San Diego-based Kratos designs and builds systems, platforms, and products for national security and communication. The company has numerous divisions, including the Kratos’ Unmanned Systems Division (KUSD) that includes the Kratos Unmanned Aerial Systems unit. Within this unit, the company is able to create tactical unmanned aerial vehicles for U.S. Defense Organizations, including aircrafts like the X1-58A Valkyrie and the UTAP-22 Mako.xxvii In 2018, the company generated $618 million in revenue.xxviii
Denis is a private pilot with a lifelong interest in aviation which compelled him to start Jetoptera. Prior to founding the company, Denis had a career in quantitative finance. He was Partner at PDT Partners, a leading quantitative hedge fund, and Managing Director at Morgan Stanley. Denis has a PhD in Computer Science from Carnegie Mellon University in the area of theory of programming languages. He also triple majored in Computer Science, Mathematics, and Philosophy at the University of Pennsylvania.
Andrei has an extensive background in research and development, technology maturation, experimental proof of concept, and gas turbines in aerospace engineering. He spent nearly 15 years at General Electric (GE) working in various divisions. Andrei spent time in the technology groups at GE Global Research, GE Oil and Gas, and GE Aviation, where he was the Technology Integration Leader and Technology Maturation Leader for the GE9X engine. Andrei earned his PhD from Rutgers University in Mechanical and Aerospace Engineering, his Master of Science in Aerospace and Propulsion Systems Engineering from the Polytechnic Institute of Bucharest, and his Bachelor of Science in Engineering with Honors from Manchester University.
Throughout her career, Simina has gained entrepreneurial experience in software, energy finance, and aerospace, with an extensive background in investment management, quantitative analytics, capital markets, and investment banking. Her early career was spent on Wall Street, at First Boston, Merrill Lynch and Bear Stearns. Simina earned her PhD from Westfield College and her BA from Princeton University.
Todd joined Jetoptera in the summer of 2019, after over three years as the Director of Business Development for Collins Aerospace. During his career, he has held director level business development roles with Textron Systems, ITT Exelis, and General Dynamics Advanced Information Systems. Todd graduated from Oregon State University with degrees in Political Science and Government.
Jetoptera has predominately used prior capital towards professional services, equipment, wages, research and development, and general and administrative costs of running the business. During its most recent raise, Jetoptera issued convertible notes with a $24 million valuation cap, 20% discount rate, and 9% interest rate.
An investment in the company is speculative, and as such is not suitable for anyone without a high tolerance for risk and a low need for liquidity. You should invest only if you are able to bear the risk of losing your entire investment. There can be no assurance that that investors will receive any return of capital or profit. Investors should have the financial ability and willingness to accept the risks (including, among other things, the risk of loss of their entire investment and the risks of lack of liquidity) that are characteristic of private placement investments. There will be no public market for the securities being offered, applicable securities laws will restrict any transfer of the securities, and the securities will not be transferable without the company’s consent.
The information provided herein is not intended to be, nor should it be construed or used as, investment, tax or legal advice, a recommendation to purchase, or an offer to sell securities of the company. You should rely on the offering statement and documents attached as exhibits to the offering statement when making any investment decision. An investment in the company is not suitable for all investors.
The company’s industry is highly competitive, and the company may not be able to compete effectively against the other businesses in its industry. The company is subject to a number of significant risks that could result in a reduction in its value and the value of the company securities, potentially including, but not limited to: