Svilen Rangelov On Raising $40 Million From 1,500 Investors To Create The First Cargo Drone Airline

Svilen Rangelov and his brother have already raised tens of millions of dollars for their tech startup that has reinvented the supply chain. Their venture, Dronamics, has attracted funding from top-tier investors like Speedinvest, European Union, Strategic Development Fund (SDF), and Founders Factory.

In this episode, you will learn:

• Startup fundraising options
• The future of delivery
• Gaining the first mover advantage
• Starting up outside of the US
• Refusing to be out-hustled

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About Svilen Rangelov:

In 2014 Svilen co-founded DRONAMICS with his brother Konstantin, a Forbes 30 Under 30 Europe innovator and aerospace engineer, with a mission to leverage advances in autonomy, aerodynamics, and production, in order to democratize air freight and accelerate e-commerce in emerging markets.

The Rangelov brothers are leading a small but growing team of world-class aerospace engineers and logistics experts, whose groundbreaking work has won numerous international awards, including Pioneers Festival 2015 (out of 1,600 startups from 98 countries).

Connect with Svilen Rangelov :

• Crunchbase
• LinkedIn
• RocketReach
• ResearchGate

Read the Full Transcription of the Interview:

Alejandro Cremades: So alrighty hello everyone and welcome to the deal maker show. So today. We have a really amazing founder. You know we have a founder that you know is building something remarkable, right? now you know out of a really interesting you know country you know where they got started. But then we’re gonna be hearing about all the good stuff building scaling financing and all that that we like to hear and also especially in a very ah, very very, you know, like very much up and coming market. You know this segment that he’s in you know, there’s a lot of hype. You know there’s a lot of good stuff going around it and again you know you’re going to love this. So. Without further ado. Let’s welcome our guests today swi and ranangalov welcome to the show.

Svilen Rangelov: Um, thank you. Thank you all Handra It’s great to be here.

Alejandro Cremades: So Gio Salurrofa walk through memory lane. How was life growing up in buulgaria.

Svilen Rangelov: Oh it was in 1 word interesting so boguer was ah had a totalitarian regime with communism until 1989 um, that ended when I was about five years ago five years old and um, and so so and my brother was born shortly after but the early 90 s was like the wild west there were a lot of economic crisis. There were hyperinflation. There were um, you know run on banks ponzi schemes you name it is super unstable. Was the yugoslavia wars next door. So there was embargo on a lot of trade so price were through the roof shelves were empty and like our dad had to line up for gas for like three days at the gas station and our mom would like go and bring him food so it is like but that’s not just for us. It’s. Everyone in Bulgaria went through through that but that kind of really made us very sensitive to the to the fact that if you live in the periphery and if it’s not stable like you end up paying dearly for that. So it kind of informed us on you know what we’re doing right now which is with dronomics to to build a new type of. Um, same day delivery solutions so that we can close the distance gap between you know, big cities and as fall.

Alejandro Cremades: So then in in your guys’ case you know like what was did you have like anyone in the in the family that was an entrepreneur or anyone in business.

Svilen Rangelov: No, not really so our our grandfather was in charge of one of the regions in Bulgaria he was um in charge of well he was the deputy and as a deputy he he got to do all the work. So that his boss could take all the crate but in a centrally planned economy he was in charge of supply chain. But that’s about as much of a touch point. We had our mom and dad are a teacher and a journalist so they were always very careful to you know invest everything in our education but not really. Take any risk and they were very encouraging first us to go out and take risks so we have a lot to thank them for but our mom also went you know as a you know example of um, ah, being very determined she she went and got a job in.

Svilen Rangelov: She she heard that this american school in in bo area in Sophia actually ah the the kids of the of the staff get to study for free because otherwise it’s private and very unaffordable so she went and got a job there as a teacher and then a few years later when we were of age 2 ah, pass the exams and and enjoying that was a huge trampoline for us because pretty much everyone who graduates this school goes to college or university in the us or Europe and we have a lot of friends for all all over who’s been who’ve been super successful. Um, so in my case I went to study in the us I studied economics again. The entrepreneurship streak. Um and my brother studied airspace engineering in The Netherlands so um now we’re building a dronchemel.

Alejandro Cremades: So it sounds it sounds like it sounds like the numbers. You know why say a constant there. So so why numbers you know what’s happening with numbers. You know with with you and your brother you know, problem solving you know numbers where did that come from.

Svilen Rangelov: We’ve always been super curious numbers explain the world very nicely or at least help you formulate hypotheses about the world. Um, so numbers are Great. We also care a lot about language you know both our parents. Our mommy is a liter teacher and our dad is a Journalist. So Language matters a lot. But as we see now with Ai. There’s a lot of similarities between numbers and language.

Alejandro Cremades: Got it now now in your guys’ case you know like you once you graduated you know you you went back there and and you were doing ah a bunch of several companies I mean what were some of the projects that you were involved with so.

Svilen Rangelov: Yeah, so I graduated all 7 at the height of the well actually just just as the the housing markets crashed. Um I had just ah joined up.

Svilen Rangelov: Company for with a friend of mine importing furniture from Morocco to the us um, and you know a few months into this the the housing market collapsed and it was just not useful for us to stay anymore in the us. Um, so I went back to Bulgaria and got a job at the you know galas safe secure job at 1 of the big 4 companies um in tax consulting economics was a great major because it doesn’t force you to choose at the same time. Um, that’s not always super helpful. So. Felt that you know back then in Bulgaria there were mutual funds that had smaller portfolios than the investment club that I was running in my college. Um, so I just felt like let me let me go into something that I didn’t know anything about so that I can learn but still have the broad look. Over many indices and I’m I’m of the type that always quits a job before finding a new one because for me, you know life is too short to be stuck in a dead end or suboptimal situation. So I would always ah alternate you know, big company with let’s call it a startup or small vis. A few of the things I did were ah well perhaps the last thing I did before duamics was with a friend of mine. We managed to to become the promoters for the j law concert in Bulgaria in 2012 and then you know overnight we became like one of the biggest promoting companies.

Svilen Rangelov: Locally it was ah the only and the best the most successful show in the country at that year and then we did a few other huge huge shows for some a listers but to me that was interesting. The first couple of times. Um. But when we saw the drone opportunity you know Jeff Bez is going on 60 minutes announcing how drones are the future of delivery and so on my brother and I realized that actually you know people will go to concerts every day but um, now now is the time to um to join this.

Svilen Rangelov: Amazing and exciting emerging industry.

Alejandro Cremades: So then let’s talk about dronomics you know at what point you know obviously you were talking about the point where the idea came to mind which was watching the 60 minutes episode with Jeff Besos talking about how it will be the future. But. How do you take that you know like from just watching that to all of a sudden there is excitement then you know you start having conversations with your brother and then all of a sudden The company is up and running I mean walkouts through the sequence of events there that needed to happen.

Svilen Rangelov: Sure it’s exactly like you say it was not a single light bub moment. There were a few of these as it was bringing our heads our initial response to the to the small drs idea was like oh wow this would work only in suburban America but for like 95% of the world. It’s not going to work because you have you know multi-story buildings people. Ah you know? So so many challenges um in urban delivery. And ultimately we felt this is a market that will be won by you know China or somebody like Amazon with unlimited funds. Um, because it’s. Essentially small plastic electronics and and and those are the only folks who can do them really well and we then looked at the other end of the spectrum where you also have a duopoly Airbus and boing with these huge expensive vehicles that cost hundreds of millions of dollars have 4000000 parts each and so on and ah in the middle you have these small single seats to seat aircraft and there’s so many of these ga aircraft around that we noticed that there’s something going on there that as you scale down the aircraft um you you don’t scale. You don’t shrink the pilots. You don’t shrink the cockpit after a point so you you really get to experience a lot of benefits if you separate the cockpit from the aircraft. So then we naturally started looking at okay the problem.

Svilen Rangelov: For example in Bulgaria was not really the last mile because the last mile. Ah what small drones solve the last mile that’s usually served in ah in these economies by I mean it’s it’s a great source source of labor so you don’t want to displace that. But what’s always been a challenge is the connectivity between countries or the connectivity between cities. So that’s why we decided to go to the mean and then the the last I guess the the stroll that broke the cameras back was um, as as as k and I were chatting he was doing in Netherlands. He was like hey when are you coming to visit me. Ah, because I need you to bring me some bogarianian cheese because I don’t really like the dutch cheese here. So and I was like well I’m not going to visit you all the way Two Thousand kilometers just to bring some cheese like you’re the engineer send me a drone and I’ll send you some cheese so that was kind of um the joke of how. It started that then we obviously um, talked to a couple of professors of his from the university um, we we essentially laid out the plan and said hey do you think if we do this this and that do you think it could work. They were like yeah it would check out. You could actually create a type of airframe that’s new and efficient and cheaper to produce and cheaper to operate. So then we needed funding and we applied to an accelerator here in bugaria that was just starting. It was an initial twenty Five Thousand Euros check

Svilen Rangelov: For 8 % of the company. It was kind of like the same yc deal at the time. Um, and yeah, that’s how we started. The funny thing is my brother then um said he’s not going to shave into the first full scale airplane flies successfully. And I said you know great idea I’ll support you because we both hate beards so it would have been beards of shame. Well, we only got to shave like um, a couple weeks ago. So yeah, it’s been 8 and yeah.

Alejandro Cremades: My god eight years later with a beard on you now I guess for the people that are listening to really get it. What ended up being the business model of John I makes how are you guys making money.

Svilen Rangelov: So atronomics we’re building um a global cargo drawn airline. So we we saw that existing airframes are not very helpful and we need to create a new type of airplane that is small unmanned. Easy to mass produce. Ah cheap to operate and cheap to cheap to manufacture. So we ended up designing the whole airplane ourselves simply because we couldn’t bite on the market. Um, we call it the black swan it can carry about £800 of cargo or three hundred and fifty Kilos and it can travel up to 1500 and 50 miles or about two thousand five hundred kilometers so it’s essentially like a flying delivery van that can you know cross all of Europe in a single flight and can enable same day delivery over long distances. Um, it is an airplane. Um the pilots sit on the ground. Um. And it’s simply very few efficient. The business model is that customers like freight forwarders logistics companies fortune 500 companies they they will use. Um, they will buy capacity on our flights. The way that they would buy them on other cargo airlines and then we do that Middle Mile delivery between city a and ctb.

Alejandro Cremades: Now how was it like starting a company like this in Bulgaria you know I’m sure it was not easy.

Svilen Rangelov: Yeah, so at the time um, 2014 again the y combinator deal was 25 grand ah the the university of my brother also had an accelerator. They would also give you you know 25 k to start with any in bogaria 25 k bogaria ah at the time was you know the lowest cost country in the eu it was also our home so we knew that we could stretch the dollars the most here. So. My brother came back. Um, but that’s kind of where the advantage is more or less ended because if you were to draw a Venn diagram about you know. Ah, customers investors supply chain. Um and talent bulgaria barely touches any of that when it comes to aerospace and the sector that we’re in bulgugaria used to have airplane factories until the second world war and then because we ended up on a side of the. Ironon Cur Curtin that site essentially decided bouger should not build their airplanes anymore. It should just buy them and the whole industry died. So for 70 years nobody ever made aircraft in Bulgaria and we were the first committee so we had to kind of start from scratch. We had to attract a lot of folks. To move to Bulgaria usually those would be bularianians working abroad and so but we had to do a lot of heavy lifting and also we had to do it on a fraction of the budget of anyone else in the west I guess in hindsight that kind of saved us because to date we’ve raised around $40,000,000 um, and had we raised that money.

Svilen Rangelov: On day one in 2014 we would have spent it burned it all and we would have shut down why because the regulations didn’t exist until 6 years after we started. So um, in hindsight it was a blessing that we chose to be in bugaria.

Alejandro Cremades: And also I mean you were alluding to it I mean you guys have raised over forty million bucks and you’ve raised it from 1500 investors I mean that’s that’s insane I mean that’s a lot of investors. How did you guys structure. You know to raise so much money from so many people.

Svilen Rangelov: Um, yeah, well we so so the first several years of I think the first six years we had only raised about 3 or 4000000 total. So the the vast majority came in the past couple years. Um. As we were hitting more milestones getting more validation. Um and and more and more people started. You know, believing that such an innovation happened here with our setup the we we have essentially on our cap table. We have the the accelerator 11 though our first investor their speed invest the fund from Austria and founders’ factory also not another accelerator, but this time from the Uk. Um, and then the rest is a wide array of Andrew Investors who are from logistics technology aviation. People that we’ve met people that have introduced us to other folks we have former Ceo of do as an investor former Ceo of Thomas Cook is an investor folks from the Dr Community and so on they it was this huge rolling fundraise that. Essentially I was on the road for many many years without a break. Um, so it’s not because we wanted it to be this way but because that’s how it happened I think the the large just number of investors came through s spvs. Um, again on those safe nodes that we were raising on. Um.

Svilen Rangelov: And we even had to ah you know, innovate in the financing because in 2021 we um, we listed an spv on the bogan stock exchange. There’s an obscure eu regulation that allows you to do that to list a fresh new entity. Um, and you get to raise money up to a certain limit that’s quite low. Um, but that but those few million that you can raise um that spv essentially bought a safe note in our company just in a similar way that any other sbv can buy a safe note. So ah. That that actually helps a lot with resonates a lot with our vision about the democratization of air afraid so in a similar way. We’re democratizing access to exciting startups. But it’s not because that was what we wanted to do initially on day one. But. It’s because it was a good source of capital for the type of business that we are.

Alejandro Cremades: Yeah, and for the people that are listening an spb a special purpose vehicle is basically an entity where you are able to group um in the us is up to 99 investors per vehicle and then you just have a managing member that manages the whole thing so instead of like going after 99 people for chasing for signatures. You will go after you know whoever is the managing member of the spb I guess the question dot com say you know here is willing. You know is 1500 investors I mean how do you go about investor relations. Oh my god how do you do that.

Svilen Rangelov: Well, um, it takes time and attention. But without them. We wouldn’t be here so it is just what you have to do um the the good thing about that is that? ah. A lot of them are you know, super helpful. Um, and then um and then there’s some who just decide you know what we trust you and are completely hands off. So so far we’ve been super super happy about the relationship. We’ve had. But obviously again I don’t know 1500 ah names I know that there’s names behind those svvs but I communicate with the the managing member the representative.

Alejandro Cremades: Yeah, absolutely now now in this case, you know also for the for the team. How many how many team members. Do you guys have.

Svilen Rangelov: We’re now a hundred and seventy um and a hundred and twenty are in Bulgaria mostly in engineering and prototyping so we we do our own building of the aircraft. Ah.

Svilen Rangelov: If if you visit us here in Sophia we’re very vertically integrated. We make not just the parts but also the tooling for the parts and and the jigs and and even some of the machines and like the oven and so on we have to make it just simply because throughout the years we couldn’t afford all these things so we have a lot of Diy. Things here. Um, and then there’s the airline team which is now growing um, last year we in fact, on the same exact date exactly one year earlier than the first flight. Um, we received the licensed operate as a drone. Airline under the new eu regulations so we were the first company and so far the only one to have that so that’s quite exciting which basically means as soon as we’re done with our flight test campaign before the end of the year we’ll be able to start commercial service. And will be several years earlier than anyone else.

Alejandro Cremades: And how hard is it to get one of those licenses.

Svilen Rangelov: It is very hard. Um, you essentially have to demonstrate that you meet ah pretty much the same criteria for for safety and procedures as a standard manned airline but also you need to demonstrate that the vehicles that you would operate would be safe. In our case, what really helped was our focus on fixed wing and existing proposs. So We’re not Electric. We don’t use batteries. There’s no batteries or electric engines that are certified that would come anything close to the range or payload that we need. And that’s going to take years until those battery chemistries get improved. So um, so so that’s why we leverage a lot of existing technology and we’re able to demonstrate to regulators that um our our system has the necessary safety and that’s why. We’re licensed and others are not.

Alejandro Cremades: Now how has it been pushing this with your brother. You know there’s an um book near’s called the founder’s dilemma and he talks about the dynamics you know of cofounders and then also you know when you have family team members you know and they talk about they. The. Sometimes it’s tough because you don’t want to hurt each other’s feelings. So how do you guys? go about you know, really dynamics between the 2 of you guys and really understanding. You know what is right for the business and how to divide and conquer on responsibilities.

Svilen Rangelov: I would say that our upbringing had a lot to do with the type of relationship we have we we grew up very close to each other and yet very respect. So our age difference six and a half we have different sets of friends and so on. But. So we learned to respect each other’s boundaries at the same time you know obviously our feuds of expertise mine is on the business side and he’s is on the engineering side make the separation of responsibilities very easy but I would say is is. The combination of those 2 things. The fact that um, it’s the person you can trust you know? Absolutely you know infinitely that’s a huge um burden that’s lifted off your shoulders when you’re star income right? So I’m not saying you have to do it with a sibling or a family member. Just find somebody that you can um, trust absolutely and unconditionally and you know that they trust you in the same way and it’s going to make a ton of difference because it’s going to be difficult on the entrepreneur journey and you need to know that. They have your back in the tough times.

Alejandro Cremades: As we talking all the journey there you know that you alluded to you know you gotta always think about the vision. You know the vision is something that you share with employees then with the 170 employees that you have with the 1500 investors that you also onboarded and I guess in that regard. You know, imagine if you were to go to sleep tonight swi and you wake up in a world where the vision ofs is fully realized what does that world look like.

Svilen Rangelov: Well, the world is in the year of twenty one hundred and we’ve just been named the most important company of the past century. So I’m I’m guessing it would be a pretty good world. Um.

Alejandro Cremades: Oh.

Svilen Rangelov: No seriously my brother and I were not building this further quick exit I guess that’s the third part of why it works with us. We are very family driven and oriented so we want to build this into a generational company but also one that makes a difference in and matters. There’s. A lot of economic research. Actually when we’re starting that we dig into and um, there was one piece where it said um the single most effective measure that the country can do ah to increase its um, you know gdp economy. Well-being. Would be to improve the conditions of its supply chain. So. There’s the traditional you know economists playbook about liberalize everything privatize everything remove tariffs lower taxes. So all these are good but nothing is as good as just. Uncloggging your arteries and letting the blood flow easily to every single organ because that’s kind of what happens right? with this huge organization trend in the past seventy plus years you have so many parts of each country that are kind of like deserted all the opportunities aggregating these. Huge centers of commerce and then everything starts getting you know more difficult the outer areas. So we’re um, we’re very driven to kind of try to reverse or at least alleviate that because by the year of 20100

Svilen Rangelov: Actually the global population is project to be around 11000000090% of that future growth will be on the continent of Africa Alone so where distances are huge roads um are in not great condition at at best. Ah, where they exist so the the only and obvious way would be to to fly. So um, it’s about serving people now but also serving people in the future. That’s really driving us.

Alejandro Cremades: Now we’re talking about the future here I want to talk about the past but I want to talk about the past with a lens of reflection I mean you guys have been pushing this business for close to a Decade. You know that in startup years because startup yearsers are like a dog years. You know that’s ah that’s a ton of time you know. So imagine if I had the opportunity of putting you into a time machine and I bring you back in time I bring you back in time you know perhaps to 2014 you know that moment where you know you saw that same episode. You know with the je bezos you know on 60 minutes and they. Let’s say right there when you grab the remote and you turn the Tv off you were able to appear right there and have a sit down with that younger self next to that younger self on the couch and you were able to give that younger s villain 1 piece of advice before launching a business. What would that be and why given what you know now.

Svilen Rangelov: Well, we kind of executed it but the piece of advice would be um, never be outusstled so we realized starting Inboer would be outfunded. Um. You know, outnumbered and so on. But what we realized was you know you could never if if you never allow yourself to be out husled then you have a fighting chance of success. So um, yeah, that’s what I would say I would say. You’re right? if you keep doing that then you will get the way you want just don’t give up.

Alejandro Cremades: I love it. That’s it. That’s it persistence persistence you know in the end I love the way that you’ve been putting things you know today with us because indian is a marathon is not a sprint I just got to keep at it keep working. So. Really appreciate that feeling. So for the people that are listening that will love to reach out and say hi. What is the best way for them to do so.

Svilen Rangelov: Best way is to follow us on social media dynamics um or dynamics dot com our website get in touch with us. There’s a number of contact there.

Alejandro Cremades: Amazing, easy enough was willlan. Thank you so much for being on the deal maker show today. It has been an honor to have you with us.

Svilen Rangelov: Thank you, Thank you so much. It’s been great.

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