When the great recession hit, our company lost most of its engineering services revenue in the span of 3 months and it didn’t come back. Luckily the unmanned aircraft side of the business had started to grow. Soon we were almost entirely focused on building and selling aircraft. At this time, the market for unmanned aircraft was primarily the military. We would come to learn that selling those aircraft to the military was a long and arduous process.
We began selling a few aircraft to small US military customers, but international militaries seemed to be buying and had more appetite for products that weren’t from the usual players in the market. Our first formal government sale was to the country of Singapore. It was a long 22 month sales process but we were excited to get our foot in the door. Given that it was so hard to sell domestically, and that you had to wait for open requirements and programs to sell, our strategy was to focus on the international market, build and develop the product, and be ready for when we had an opportunity in the US market.
Our first significant opportunity in the international market was with the Government of Canada as part of their ISTAR program. We competed head to head against significantly larger competitors and won the program in 2010. It was a huge accomplishment and served as the first true entry point for our company, establishing ourselves in the industry. With Canada we learned a lot of lessons, the system was taken into Afghanistan and we got feedback from users that we were able to incorporate into the system to make it better. Canada also gave us our first taste of what it really takes to be compliant. From inspections, to airworthiness testing, to component failure measurement, we had to step up our game.
Two years later we were able to leverage that win in Canada to secure a contract to sell to the Rapid Equipping Force or REF. The REF is part of the US army and is the organization that purchases new products outside of the standard government procurement cycles. We were also able to win positions in other US evaluation programs like LMAMs, and others. The US wins were great, but to just support those contracts we had to grow as a company. Compliance to US military programs is a tremendous burden on the company. From that point on, the company was audited and reviewed by multiple agencies. I am proud to say that we never had a finding, but that compliance came at a cost because we were not able to win the recompete of the Canadian program. That was a tough blow that would have long felt impacts. At the time, we accepted the loss. Our strategy had been successful- we had penetrated the US market.
From having lost all of our revenue during the recession to fully recovering and selling to the US military left us ecstatic. We had accomplished what we set out to do. We raised additional capital to continue growing the business. Everything was going great- and then the US Government shut down for an entire year.