The US military has awarded its largest multi-million contract for surveillance aircraft to a drone startup founded a decade ago by a Utah high school student.
Red Cat Holdings, Salt Lake City-based subsidiary Teal Drones, was selected as the winner of the Army’s Short Range Reconnaissance (SRR) Program of Record.
Teal was founded in 2014 by George Matus, then 17, with the mission to “make unmanned systems more than just flying cameras,” according to the company. website.
On Tuesday, the company announced it had won the SRR bid following a test and evaluation process of Teal’s next-generation Small Unmanned Aircrafts Systems (sUAS) by the Army.
“This is a powerful moment, after five years of blood, sweat and tears put into SRR by our incredible team. The highly anticipated production selection marks a new era for our company and the future of American drones,” said Matus, Founder of Teal and CTO of Red Cat.
“We were selected based on soldier feedback, technical performance, volume manufacturability and system cost. Our top priority now is to ramp up production of the next-generation system, recently announced as the Black Widow and WEB, and give warfighters the tools they need to succeed on the modern battlefield.”
According to Securities and Exchange Commission filings, the company is focused on ramping up production of Teal’s next-generation system to meet the Army’s current acquisition target for 5,880 systems.
The Wall Street Journal reported that the Army has stated that it needs approximately 11,700 drones for its SRR program and that the purchase could generate approximately $260 million in revenue over the next few years.
The US military has awarded its largest surveillance aircraft contract to a drone startup founded a decade ago by George Matus (pictured)
The company is focused on ramping up production of Teal’s next-generation system to meet the Army’s current acquisition target for 5,880 systems
‘Warfare has undergone a dramatic transformation over the past two years, with a significant shift towards drone technology, exemplified by the SRR Black Widow. It is an honor to support the U.S. military by delivering the Black Widow to our warfighters,” said Jeff Thompson, CEO of Red Cat.
“We believe this advanced technology will enable the Army to shape the battlefield, save soldiers’ lives and serve as a powerful tool in their arsenal. This long-term contract gives us the opportunity to continue to improve Black Widow, scale production and improve margins.”
Teal’s drone – the Black Widow – is a three-pound, backpack-sized device equipped with anti-jamming technology.
It can operate autonomously without GPS and can last about 40 minutes without emitting a radio frequency, making it harder to detect, according to WSJ.
Matus told it The Washington Post When he started his company, it was more about the fun of flying, but grew into a desire to help the military.
He wrote in a piece for Utah business that when he started his business, he applied for the Thiel Fellowship, which would give him $100,000 if he agreed to drop out of high school during his freshman year.
While applying for the grant, he met a Salt Lake City entrepreneur who invested $150,000 in his company.
“After raising my first round of institutional investment later in 2015, about $3 million, I learned important lessons,” Matus said.
Teal’s drone – the Black Widow – is a three-pound backpack-sized device equipped with anti-jamming technology
“A board member said to me, ‘George, your job is to hire good people and not run out of money. It’s in your capable hands; don’t screw it up.” It sounded simple, but turned out to be much more difficult than I thought.’
In 2016, Teal struggled to stay afloat when China’s DJI launched a 1.6-pound drone called the ‘Mavic Pro’ for $999.
During this time, the company was forced to make cuts and Matus said it was then that he received another life-changing piece of advice.
“As this chapter of Teal comes to a close, one of our first customers has reached out: a veteran who lost his legs during the war. He told me that the drone we gave him saved his life: he flew every day with video glasses to experience the freedom of flying. I shared this with the rest of the team and we felt reassured that our efforts had not been in vain.’
Then in 2018, the Department of Defense banned the use of DJI drones in the military. That same year, at just 20 years old, Matus was listed on Forbes 30 Under 30 in the consumer technology section.
When the Army first launched SRR, it ignored Teal for the job, instead awarding the drone company Skydio a $29 million contract.
Then soldiers had technical problems with those drones and the army reopened the search for a partner.
Now Teal and Red Cat are predicting $50 million in sales next year. It had revenues of $18 million last fiscal year ending in April.