‘Britain’s Elon Musk’ becomes billionaire as flying taxis ready for lift-off in London

ondon serial entrepreneur Stephen Fitzpatrick was today awarded clear billionaire status after his Bladerunner-style flying electric taxi business launched a US float valuing his stake at around $1 billion.

The valuation Fitzpatrick’s float puts on his Vertical Aerospace business will add to the £600 million value of his stake in Ovo, the fast-growing green energy provider that he also founded and runs.

Vertical Aerospace is designing and building electric aircraft which he claims will be faster, quicker and greener than helicopters but with the same versatility of where they can take off and land from.

Fitzpatrick, fast gaining the status of Britain’s Elon Musk told the Standard: “It’s a great day for us and great day for British business and engineering.

“It’s great to be able to make this announcement and tell the world what we’ve been doing for the past few years; all the progress and work we have put in.”

Founded five years ago, the company has developed a 200 mph craft capable of taking four passengers and a pilot up to a range of 120 miles. It is also silent, potentially making it easier for them to obtain permission to fly over residential areas.

The tycoon is floating the Bristol-based business in the US via a special purpose acquisition vehicle (SPAC) set up by fellow UK entrepreneur Hugh Osmond. The deal values Vertical Aerospace’s equity at $2.2 billion and will raise $394 million to hire new staff and build manufacturing facilities.

He today announced orders for up to 1000 of the aircraft from American Airlines and aeroplane leasing giant Avolon.

Virgin Atlantic has also signed an option to place pre-orders with a view to flying passengers into Heathrow, Gatwick and Manchester airports.

Combined, the three orders would total $4 billion if they happen.

Fitzpatrick said while Vertical Aerospace was a British engineering champion, he had no choice but to opt for a US share listing. “The UK capital markets don’t really support this kind of business at the moment,” he said.

“I would like that to change but at the moment it is obvious the ecosystem is far more advanced in the US.

“We are raising nearly half a billion dollars for a pre-revenue business and unfortunately we have seen time and time again that raising that kind of capital in the UK is not easy to do. There are deep capital markets in the US.”

He added that funding biotech and fintech companies was well developed in the UK, “but outside those two, the UK has not developed the same kinds of expertise.”

He stressed that the Spac team led by Osmond was made up of British entrepreneurs: “We liked the idea of working with entrepreneurs, and not just corporate financiers,” he said.

Virgin said passengers using its Vertical aircraft could make the 56 mile journey from Cambridge to Heathrow in just 22 minutes rather than facing the current one-and-a-half hour car journey.

As part of the float, Vertical Aerospace’s technical partners including American Airlines, Rolls-Royce and Honeywell will invest, cementing relationships that will see them shoulder much of Vertical’s research and development costs.

This “asset light” business model means Vertical could reach profit and cash flow breakeven with sales of less than 100 aircraft, the company said in its Spac proposal to investors.

Tech investors Rocket Internet and 40 North are also key investors.

Other companies working on Vertical’s engineering include UK giant GKN.

Commercial operations are planned to start in 2024 after European aircraft regulators grant approval.

Vertical Aerospace will be tested by regulators to stringent commercial airline standards, which the company said would make its craft “100 times” safer than a helicopter.

Because it has four propellers, its engineers claim it has less chance of catastrophic failure than a traditional one-propeller helicopter.

Fitzpatrick’s decision to opt for a US SPAC rather than floating the company in London will be a disappointment to Downing Street which wants to make Britain the preferred destination for UK tech fundraising.

Although American Airlines will be one of its big new investors, Vertical is a very British company, with a top engineering team largely drawn from Rolls-Royce, Airbus, Jaguar Land Rover and the Ministry of Defence.

Fitzpatrick said: “Transport, and flight in particular, is about to go through the biggest change since the jet engine with electrification. The UK led the world in aviation back to the dawn of the jet era. I am really convinced the UK is the best place in the world to build electric aircraft now.”

Vertical’s current factory is in Bristol but it will need to build another as it scales up production. Fitzpatrick said he was yet to decide where that would be.

Unmanned test flights will begin later this year with piloted versions afterwards.

Fitzpatrick said his time building Ovo had shown him that, when markets are going through dramatic change, incumbent players find it extremely hard to keep up with the disruption.

“I’m not suggesting an end to jet turbines [from the likes of Boeing and Airbus] but what I have seen in energy is that with organisations that grow up dependent on a particular technology, one day they see everything is changing but they see it too late, especially with electrification, which changes the economics of how your products work, the way you build them and so on. It’s really difficult for them.”

The Spac is structured as a merger with a shell company set up by PizzaExpress entrepreneur Hugh Osmond’s Broadstone investment vehicle.

Osmond said: “Transportation is one of the next big sectors of the global economy to be disrupted at scale.

“Vertical has a clear commercial plan to challenge short-haul air travel, and to create new markets where neither cars nor public transport can cope with demand.”

Vertical Aerospace will face competition from other firms in the same market, known in tech circles as urban air mobility. Joby Aviation from California, Archer and Lillium are also vertical aviation start-ups that have reversed into Spacs.

Asked how he was differentiated from them, Fitzpatrick said: “It’s all about the expertise. We have built the world’s most experienced aerospace engineering leadership team. Between them, they have 1200 years of experience, they have developed and had certified more than 30 aircraft. Some of our competitors have gone for less aerospace-based engineering teams. In this business, aerospace really counts.”

He added that the partnerships with other aviation experts like GKN and Rolls-Royce was also key. “Some of our competitors are trying to do everything themselves, but we really believe in our partnership model.”

The sharing of R&D costs were also crucial, he said. “I learned at Ovo it is really important to make your investment pounds or dollars go as far as possible. I started Ovo off with £300,000 of savings and made that last for six years before we raised any other capital.”

Fitzpatrick was a banker at JPMorgan and SocGen before launching Ovo, trading corporate bonds including for aviation companies.