Aerial drones are big business these days. It’s not only a smart toy for amateur hobbyists but also a problem-solving device for lots of industries from logistics to agriculture. Although a few years later than its now fully grown-up airborne cousin, underwater drones are finally coming of age in 2018.

“2016 marked the Year One for underwater drones when lots of startups spotted the market potential and entered the field. Two years later, their previous efforts in product development and marketing are generating results. This could signal a new surge in a fledgling market,” Yang Yang, COO and co-founder of submersible drone maker Chasing Innovations, told TechNode.

Early signs of underwater drones’ gradual rise

The increase in underwater drones at CES Asia earlier this month echoed Yang’s assertion. Aquatic drone displays at the show and media coverage that followed are considerably bigger than the previous years.

Almost no new aerial consumer drones mainly during the event and the spotlight fell on underwater models such as those from Beijing-based RoboSea and Shanghai-based Youcan Robotics.

“Underwater drone startups are winding through R&D and gradually moving to mass production now. This explains why CES recorded a surge of submersible drone makers that are looking for publicity,” said Yang. On the other hand, the lack of aerial devices is not so surprising, given the monopoly of DJI.

Of course, this round of underwater drone frenzy is propelled by venture capitalists. Chasing Innovations received Pre-A funding in June from Shenzhen Capital Group.

Yang’s startup only represents a part of VCs’ attention to the emerging vertical. RoboSea has secured an eight-digit RMB A round in January this year, while another underwater drone developer Geneinno received RMB 15 million in a Pre-A round.

However, the underwater drone industry is still at an early stage of its development, which is obvious given that most startups in the field are still in A or pre-A stage and their funding size is not big. “For the future one to two years, the industry will see the entrance of more players, testing and educating the market,” he predicted.

Compared with internet-related markets, underwater drones, and hardware devices in general, would have a more progressive growth trajectory, according to Yang. “Heavy capital injection might be able to create a dominator in some internet verticals over a short period, but that’s not the case for the hardware market because the development of technology and solutions for hardware is a gradual process,” he said.

Crucial time in making the right market decisions

At this stage, startups in the field have plenty of important decisions to make, and the choices they make now could determine the future not only of the companies but also the industry. “Most Chinese underwater drone developers choose overseas and consumer markets as their launchpad,” said Yang.

Chasing Innovation has shipped tens of millions of its first product Gladius since it entered mass production last September. 90% of them are delivered to overseas markets including North America, Europe, and Australia. The startup developed an overseas-market first strategy. So do most of the companies in this market, Yang reveals.

Chinese smart hardware device makers have long developed overseas market-first approaches to product launching, largely due to the more matured DIY culture and love for water games in overseas consumers. This is especially true for underwater drones, which is still a new vertical even for overseas users.

But this does not mean there’s no chance for the Chinese market. Yang believes the opportunities in the local underwater drone market mainly lie in enterprise-level products, which can be used for aquatic surveillance, mapping and real-time communications, and education.

“The consumer-level market is going to boom earlier than the business-targeted market in general, because the latter needs a more professional understanding of each vertical in a bid to develop not only the hardware but also comprehensive solutions to support better integration into the original ecosystem of the industries,” said Yang.

By tapping the Chinese market, Chasing Innovations is planning to launch a series of products later this year, including both consumer and business drones, he added.

Although there are not many groundbreaking improvements in terms of technology, the general tendency for underwater drones is towards portability, easy operation, sleek design, and affordability.

“More stable video transmission, diversified track curve, and attaching sonar detectors or robotic hands to drones are some of the directions we are trying to work on,” said Yang.