As an early investor in both Amazon and Tesla, the Scottish fund manager Baillie Gifford certainly doesn’t have a bad record when it comes to spotting tech start-ups worth a punt on. Which means German flying taxi start-up Lilium might well be worth keeping an eye on after the fund manager backed it to the tune of $35 million.
Lilium hopes to be flying passengers between European cities as soon as 2025 in its small, electric aircraft. The German start-up is Baillie Gifford’s second investment in the electrical urban aviation space, with the company also backing Joby, the American electric aircraft manufacturer also working on launching an air taxi.
The funding round for Lilium that Baillie Gifford has participated in values the company at around $1 billion, which would put the fund manager’s stake at a little under 4%. The funding round brought in a total of $375 million of capital and was led by Chinese technology group Tencent.
Munich-based Lilium’s aircraft has fixed wings but is able to take off and land horizontally thanks to rows of tilting rotor fans. It has a range of around 186 miles, or 300 kilometres.
The Baillie Gifford investment is being made through Scottish Mortgage, the UK’s largest investment trust and a constituent of the FTSE 100. It is managed by James Anderson, and has done very well in recent years thanks to investments in tech companies such as Amazon and Tesla in the USA and China’s Alibaba and Tencent. Scottish Mortgage’s 7% stake in Tesla makes Baillie Gifford the electric car maker’s largest shareholder after Elon Musk.
Lilium will use the new capital raised to cover costs throughout the Covid-19 lockdown while developing a manufacturing plant for its aircraft. Chief executive Christopher Delbrück commented:
“Baillie Gifford is one of the world’s most influential tech investors and their commitment to Lilium represents a significant vote of confidence in both our physical product and our business case”.
“The funds raised during this round give us the security to weather the challenging economic landscape and we’re grateful to be able to stay fully focused on our mission.”
For its part, Baillie Gifford investment manager Michael Pye explained the investment was made because the company is convinced that small electrical aircraft of the sort most often referred to as ‘flying taxis’, will have “profound and far-reaching benefits in a low-carbon future”.
But Lilium, which currently employs 450 people, does face tough competition. There are a number of competitors in the space of city-to-city flying taxi services, many of whom have deep pockets. U.S. rival Joby, also part of the Baillie Gifford portfolio is one example and even in Germany Volocopter, is also developing a flying taxi model and has attracted over $130 million in investment.
This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.