When the Lily camera drone was announced in May 2015 it garnered a lot of attention for being one of the first drones capable of flying itself and tracking a user while capturing video footage for up to 20 minutes. As a consequence the company managed to secure $15 million in investment and an additional $34 million in pre-orders.
However, today the founders of Lily have announced in a letter and email to customers that the start-up is shutting down operations because it failed to raise additional funding to start production of its drone. The founders promise to reimburse all pre-order customers within the next 60 days.
"We have been racing against a clock of ever-diminishing funds," wrote the company's co-founders, Henry Bradlow and Antoine Balaresque. "Over the past few months, we have tried to secure financing in order to unlock our manufacturing line and ship our first units - but have been unable to do this. As a result, we are deeply saddened to say that we are planning to wind down the company and offer refunds to customers."
The Lily drone was launched with a pre-order price tag of $499 and scheduled to ship in February 2016. Shipping was later delayed until summer and then again to early 2017. In the same time frame tracking drones from DJI, Zero Zero Robotics and Yuneec have all been brought to market successfully.
On February 27, 2017, Lily Robotics, Inc. filed a voluntary petition for relief under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. The case is pending before the Honorable Kevin J. Carey.
You can track the progress of the bankruptcy at the webpage whose link is provided below. On the webpage, you will see a heading: “NOTICE TO CUSTOMERS SEEKING REFUNDS.” Under that heading, you will see a link that will allow you to provide your current address and email.
We suggest that you preserve any correspondence, credit card statements and the like, just in case further proceedings are necessary.
Lily the little drone died born !!! Here is his original advertising video Cost 500 euros in pre-orders Https://youtu.be/4vGcH0Bk3hg Observe well and read the legislation .. In September I wrote this post you will find the links https://plus.google.com/+BernardSPREX64/posts/gpsYweJ2kju Lily is not especially in compliance with the requirements of the new legalizations UAVs USA and France + and the framework of the directive European drone that will exit Clearly the spectacular follow-me is an aberration and the flying height of the toy is prohibited no more complicated to understand that they have not obtained homologation what has my sense explains the delay in delivery .. The drone law UAVs from the USA date June 2016 !!!! In fact the truth is that they have not obtained the expected approval and are not in compliance with the new US UAVs legislation implemented in June 2016 Valid also for the current France and Europe !!! The European directive is in the process of being finalized
Must've went office-campus shopping, right after the open-bar yacht launch party. If people can start successful companies out of their garage with only enough capital to buy a smart car, I can't see where 15 million dollars decided to wander off to...
You don't need to judge dpreview because you know more information. post here is perfectly valid. You are welcome to add more and further articles here in comments.
Anyone receive pre-ordered Snap drones made by Vantage Robotics? This was another selfie drone, announced in 2015 with impressive specs, whose delivery suffered delay after delay.
I'd guess it is very difficult to deliver a drone which lives up to claims, sells for under $1,000, and makes a profit. The "apps" and control systems turn out to be difficult to make work well enough to offset all the attendant risks: trees, walls, wind, water, severed fingers, signal loss, mis-calibrations, dead batteries, and naïve or reckless purchasers. Meanwhile, there are now $400 selfie drones with GPS, and perhaps 2017 will see cheaper ones with rudimentary follow-me camera functions. Just don't expect the video to be as good as seen in the promos.
My guess is they determined each manufactured unit would ship at a loss. This move saves the company money. I'd bet they will sell the design and someone else will manufacture for a higher price.
I don't get it , if the project is real, the company had $34M from pre-order to start with , they must have done something (eg: to hire people, lab, test, prototype), they must have spent a lot of money during the year. Today, they are still able to refund to everybody with full amount ? I would think differently in this matter now, they might invest the 34M on something else, make profit , and then refund to you guys ? just a thought ~~~
colacat: $34M was only the part from the pre-orders. They also received $15M of investment capital and perhaps some of their own startup seed money. My guess is that the $34M pre-order money is (in large part) still available for refunds. The operating costs were likely paid for through additional borrowing (credit) and the investment funding.
The Lily investment is a lot like penny stocks. The company can make claims to refund but actually just needs to declare bankruptcy and that's it. Penny stocks do just that. DPR unwittingly helped market this.
Ever read sites like phys.org? Or popular mechanics or science? Every day, glad new stories of wonders coming from labs, just around the corner, revolutionary each and every one. And almost NONE ever appear as products.
Most of the Lily footage was filmed with DJI drones. Lily was a scam from the start. If it's too good to be true, it probably is. Lily, like the evasive Canon FF Mirrorless.
I got a full refund a few months months ago. The last delay announcement was a bridge too far for me, and I had a strong feeling about where this was heading. Investors received a long stream of "progress updates". The progress was painfully slow and it seemed inevitable that either funds would be squandered away or another manufacturer would release a drone that would make it obsolete.
For $500 or even $1000, there was no way this would have worked as advertised. At least the preorders don't end of holding the bag, like the typical Kickstarter/Indiegogo startups. The VC's get burned, but preorders get their money back.
I don't think that's true. Let alone the hour rate, you still need to pay insurance/benefits and overtime for the labor in US. On top of that, the manufacturer need to pay for recycling and whatever waste treatment, where China just dump it in the backyard. I don't think $40 is enough to covers that.
It was a financial analysis of the potential of repatriating certain industries stateside. I hope they got it right, if they didn't, it'll cost someone if they actually ever do it!
DPR in the future can you stop advertising for these scam campaigns? What's shown here is merely an incapable manufacturer, which however, is a capable scammer. Just look at the market, there's a far amount of selfies drones, which some are from small companies, which I believe would have way way less funding then Lily drone. And at the same time these companies are bearing the risk of their products!!!! not dumping all the risk on the consumers.
On the contrary I think the people behind Lily are responsible entrepreneurs. They had a business plan with the numbers carefully worked out, so decided to drop the project as sufficient capital count not be raised. I wouldn't discredit them by calling them 'scammers' as they are refunding their customers.
I would however be very critical of a crowdfunded project that goes bad shortly after take off, just because the entrepreneur did not take the trouble of working through the business plan carefully, and considering how the competition might react to a new launch. In a dynamic and competitive world, the competition does not sit on its hands when a new product is launched. They fight back, and anyone entering such a market has to factor-in competitor action in the business plan.
An interesting development, but not a surprising one as crowd-funding / kick-starter projects are a relatively new form of venture capital and it is being debated by lawmakers whether it falls under the consumer protection law. Pre-orders (e.g. Nikon products on www.amazon.com or www.bhphotovideo.com are different from kick-starter sales. In my humble opinion, consumer protection law should not undermine kick-starter initiatives. If Lily payback everyone, there should be no grievance. Google the book "OECD Business and Finance Outlook 2015" and read pages 169-171 which shed light on recent challenges for regulators. Lets see how this case pans out. Thanks again for sharing the article.
You're naive if you believe they have the $34 million they took in from pre-orders and they've just been sitting on it. Most likely customer will get partial refunds or none at all.
they had $34 million to produce the units (and most likely it was under priced, so they could make a lot of sales, to make a dent in the market - so it probably didn's cover much except the units themselves. For comparison the DJI mavic, is more than $1000). Beside that they needed money to actually make the production line (and they raised about $15 million for that) but it seems it wasn't enough. They planned big and failed.
1.12.2017 17:14 The San Francisco district attorney’s office sued Lily Robotics on Thursday over claims that the San Francisco drone maker engaged in false advertising and unfair business practices. “It does not matter if a company is established or if it is a startup,” “Everyone in the market must follow the rules. By protecting consumers, we protect confidence in our system of commerce.” Lily booked 60,000 advance orders at $499 to $899 each. Gascón’s office obtained an order from a judge requiring the company to return all the money it received from orders to customers and not use it for other purposes. The company had used customer money to secure a $4 million bank loan. The suit also alleges that customers had “considerable trouble” requesting refunds and that Lily has “lost contact with a high percentage of its preorder customers.” More info at: http://www.sfgate.com/business/article/Drone-maker-Lily-Robotics-sued-by-San-Francisco-DA-10854413.php
"After conducting what it said was a months-long investigation, the office alleged that Lily lured customers with a promotional video that was actually filmed by a “much more expensive, professional camera drone that requires two people to operate.” - the article
The sales were placed directly through Lily Robotics website instead of through a Kickstarter or Indiegogo campaign, as the company decided to keep the lights on for the foreseeable future with $15 million in venture capital funding. After a $1 million seed round, Lily raised $14 million with a Series A round led by Spark Capital, SV Angel, Stanford-StartX Fund, and other big names including Steve Aoki and Joe Montana.
May 13, 2015 DPReview; Lily Robotics was born in UC Berkeley's robotics labs, and has to date raised $1 million in venture capital. The camera is available internationally for pre-order now for $499 USD. Once it comes to market, the price jumps up to $999.
Too bad, that was my favourite drone version I' ve seen... Hope those who pre-ordered get their money back. Although, it sounds like the founders treated their business more like a pyramid scheme. Again, hope I am wrong... :(((
It looks like their statement is cleverly (or carelessly) worded. "we are planning to wind down the company and offer refunds to customers." I'm troubled with "offer". Do they expect customers to reject the "offer" and tell them to keep the money and use it for a nice vacation in Hawaii? Do they have anything else beside refunds to "offer"? I'm also troubled by "a refund". Is it 5% of what customers paid? 10%? 50%? Why can't they come clean and say "we will "ISSUE" a "FULL" refund?
On the other hand, $50 Million is not small money, and with that kind of "seed" money, major banks would be happy to pump in more money if needed (although such amount should be good enough for them to start production). Therefore, I don't believe they received such a large amount of money in pre-orders. $34 Million amounts to 68 thousand orders (at $500 a piece), which is doubtful. I think they inflated the numbers for obvious reasons. Just my 2 cents. Good luck to those who sent their $500 in advance.
By the sound of it, the company needed a very high number of original orders to make this start up work since the company charged too little based on realistic costs verse first round presumed manufacturing costs. If you read about lily it sound like they really needed to charge double for this product to really ever hit the market or another 15 million in investments without producing more products. So first orders would be a loss leader. Worst part is they seem to mean well and want to refund original preorder sponsors but not sure how that will work since lily started with 15 million presumably spent for research, ads, prototypes and employees, hence the need for bankruptcy. So even if they haven't touched the 34 million from sponsor orders, lily had to pay whatever company collected this money a fee, most likely around 5%, than a credit card fee 2-3%, than a return credit card fee 1-2%. So not sure where that 3-3.5 million will come from, also by the sound of it they may have other debtors to pay off as well. So I think a full refund would be overly optimistic. The risk of start up or go fund me company investing or product buying. At least this was a new company, I hate seeing go fund me's from existing large companies, just so they don't have to risk their own money for a new product.
The 34M are pre-orders, so not really from sponsors but just enthusiastic buyers. This money would be a straight-forward credit card transaction, for which I beleive there is no charge at all if sale is cancelled and refunded.
I didn't order one so not sure how it was done, if the customer's card is charge there's a fee and if it's refunded there's a fee. Cancelling a charge only works within the same billing period, so not a year later, once pooled its too late to cancel and most be refunded. If the charge was only a hold than the customer's charge would just drop off after a week or so if it's not converting into a charge. Holds do not last a year. So if lily physically collected this money they paid fees.
And with bankruptcy the company only has to use money left in a the company to pay off debtors and that would also be customers who never received there orders. Therefore it all depends how much money they have left and if they can afford to actually fully refund everyone. Just because a start up fails doesn't mean every company it did business with doesn't want their money each company performed a service used by lily as well.
Sounds like different conditions to here in France, I've never seen any charge on a cancelled sale here. I think the Lily was being pre-sold on Amazon, it would be interesting to know who the 34M of sales where made through...
I had pre-ordered a Lily and ended up canceling last summer after they missed the summer 2016 estimated launch date. It took a week or so to get the refund processed, but I got the full amount back. I had paid them with a credit card and they refunded me via PayPal, and they used some third-party company to process the refund. So, they definitely had transaction fees on both ends of the transaction.
Disappointing, though - it looked promising, although at this point I'd prefer a Mavic Pro anyway.
"After a lengthy investigation the attorney's office alleged that the promotional video, which was used during the initial *crowdfunding* campaign for the Lily Drone, had not been shot with an actual prototype of the device but a “much more expensive, professional camera drone that requires two people to operate.”
Sorry to see they didn't make it, it was a cool idea.
There's a lot of uninformed griping in these comments about this being a "ripoff". They tried and failed, that's not the same thing as being a ripoff. A new tech company like this is taking a risk they can reach a bit beyond what is currently possible and deliver. Crowdfunding such an effort is a risk where you invest in something cool and hope it delivers. It is not like ordering from Amazon -- the investment may fail.
I heard from this company while they were hiring, they seemed legit. And judging from the features in other recent drones, they got their product about right. They even say they'll refund money, which is a bonus. And means they funded themselves off other sources while keeping this in reserve.
The world the complainers seem to want, where people only invest in sure things, would be a boring one.
Pre-orders are not investments, and to say refunds are a bonus is just insulting for those who pre-ordered. Unless of course the terms of this particular pre-order stated clearly that the order is not guaranteed and the money are non refundable.
VadymA, I'm guessing you are unfamiliar with crowdfunding sites? IndieGoGo/Kickstarter are used to pitch an idea that needs funding, to present why you'll succeed, and to offer investors a reward if the project pans out. The sites make very clear that there are no guarantees of success or refunds. There are no actual "pre-orders". Just potential "perks," "rewards," etc.
The Lily wasn't crowdfunded, though. They were offering pre-orders through their own website, promising that you can cancel for a full refund at any time. This wasn't a KickStarter with all it's fine print and warnings.
@tyyreaun What's the difference between using a website dedicated to crowdfund a product or do it outside such website? None, I say. It is the idea, or rather method used to finance product developement and launch that counts. "Crowdfunding" is yet another linguistic spin on product funding that existed before. Last decade or so has "produced" or, "introduced" so many new terms to describe economic activities that existed before anyway and already had names. "Crowdfunding" replaced "Pre-order", "Sharing economy" replaced "Work without employment contract"/"Civil law service contract" are a couple of new terms.
@T Olivier Except that crowdfunding and pre-ordering are fundamentally different, not the new name for the same thing.
Without considering the Lily case, crowdfunding is giving money to a company to help them develop a product, in exchange for the product once it's available. Kickstarter, Indiegogo etc., all explicitly call out the risks, including that the product might not get made and you might not get your money back. It's NOT investing in the company, as you're not getting equity.
Preordering is placing an order for a product expected to be released in the future, including occasionally paying for it, with the expectation that you'll get something back - either the product or your money. B&H doesn't require any money down, but other companies (e.g., GameStop) do collect a deposit for preorders. If GameStop were to go bankrupt, you'd be an unsecured creditor and likely not get your money back.
Admittedly, Lily did blur the line. They collected the payment up front with the expectation that they payment would help fund production. However, given they explicitly stated that users can ask for a full refund at any time, I believe they're legally in the pre-order category - hence why the SF DA is demanding they return the money. If it was a failed Kickstarter I doubt the DA would be going after them (short of clear fraud).
As I mentioned in an earlier post, I had pre-ordered the Lily, canceled the pre-order last summer after they missed their second release date, and got my full amount back. People who still had it pre-ordered may be SOL if the company is out of cash and declares bankruptcy, but that's not the same thing as losing money on a failed Kickstarter - anyone who still has a pre-order would be considered an unsecured creditor in court, whereas Kickstarter backers probably wouldn't.
Just to add regarding all the hate on crowdfunding in this thread, I'm surprised / somewhat in disbelief when people say they've never gotten anything back from crowdfunding.
I've backed 14 Kickstarters, including some that were mentioned on this site (Peak Design straps, Breakthrough Photography filters - both of which are great products). Of the 14, I've gotten back exactly what I expected from 11, two are delayed but still in progress, and one is scheduled for March 2017. I've only "lost" on one Kickstarter - not a bad record, IMO.
If you hate crowdfunding because you've lost out on a number of products, I'd suggest vetting the campaigns more closely - track record of founders, plausibility of the product, etc.
Yeah, big projects seem riskier than small ones. I've contributed to a lot of local art projects with great results, as well as board and card games and little DIY geek hack gadgets. Big ambitious electronics seem dangerous.
I have backed several and got my product from each of them, but... I only back small projects with "down to earth" approach and a manageable business plan. I think crowdfunding works very well for those cases.
However, whenever I hear about another "we are a couple of random people (mostly, designers that create pretty pictures), but we will REVOLUTIONIZE the engineering field that huge and innovative companies with a lot of money fail at", I am pretty much sure it's either a scam or a complete lack of realistic thinking or subject understanding. In any case it's going to fail.
No, this crowd will wait for a KS campaign for a drone with 10 hours battery life, 8K 25 axis stabilized video at the size of a matchbox (hotel match box, thin version) for just 50$ pledge. It's a steal really. It also supports VR, IS, ID, BD, ISIS and AIDS.
Now investors can spend their money on better things like donations to the widow of the Unknown Soldier, river front property on the Northwest Passage, or laundry discs.
Hmmm, another crowdfunding ripoff. I think the vast majority of crowdfunding projects are nothing more than ways for crooks to make a good salary for a few years then fold up leaving the investors high and dry. I have absolutely no sympathy for the investors. A moron who invests in a scam that is clearly a scam gets what they deserve. If inventors don't have the wherewithal to obtain legitimate funding from financial institutions, much less even create a decent business plan, then only morons will invest with them.
Smells like a rip-off, i'll agree... but investors are not the ones to blame, the integrity/security background checkup system of the crowdfunding sites is at fault here.
@frosti7 what? even the largest investment banks would not have enough resources to perform the number due diligence work on the sheer number of active / on-going projects Kickstarter, Indiegogo etc.
"investors" backing the projects accept the risk that comes with giving random strangers on the internet a couple of hundred dollars to build a widget of their dreams.
the "company" usually consists of some group of people with very little, to no manufacturing experience thinking they can rapidly prototype some gadget, send it to China, magic happens, and the product is ready to go-to-market.
the crowd funding platforms merely provides a way for these two groups of fools to connect with each other. sometimes it works out, many times it does not.
i think indiegogo, while is receiving 9% of the 34 million dollars from this project alone, which is 3 million dollars from the lily project alone, can spare a few bucks to make a security checkup for the big projects that are being run there.. in fact i just discovered that Indiegogo have a Trust and Safety Team that currently investigating the case.
Wrong - Lily has never been on Indiegogo and their investigation is into a fake Lily page put up on Indiegogo that did not receive actual pre-order money.
That depends on the particular crowd-funding. Often you get some return like freebies or cheaper deals on something produced instead of hard cash back. P.S. The pre-orders are not normally part off crowd-funding, theoretically they should be re-imbursed.
As much as I dislike pie in the sky crowdfunding vapour ware this one does not look too scammy. The same company announced on petapixel that everyone who has paid in advance will get all their money back. There are a fair number of drone manufacturers chasing customers, surely the drone market is only a tiny fraction of the photography retail landscape, i am not surprised investors were hard to find for the niche lilly was trying to compete in. Too late to the party and not a lot of people at the party either.
This was obviously a scam from the moment I saw the first videos of it. And I have been saying that to everyone that keeps telling me "yeah, the new drones follow you around and are waterproof and are $500"
With current tech all of this is "possible" but not cheaply and not from a startup with no experience in tech, no experience in manufacturing, no existing patents.
Its just like fully automatic "selfie drones" they "may" be possible, but not a polished product that is reliable if they are made by a startup.
There is a reason that Sony or Samsung are not making these things, to make these kind of products is VERY difficult.
They took money, hired a bunch of people who did nothing but attend meetings, and spent all the money paying themselves big salaries and other expenses. Oops, nothing left over for product. Check out Elio Motors for a similar scam. Scam. It's called a scam.
33million 999 thousand 501 dollars to go , unless they are one of dozens who recieved refunds in 2016 when a deadline was missed ,.... i read that too
they are being sued by the state of calf and im sure one or more class action suits will follow ..... i see people claiming this debacle wasnt crowdfunding , but it was , it simply was done privately without indigogo or kickstarter involvment
Except for bank stocks and real estate, crowdfunding is the only sane and empowering vehicle of investment available ..... too bad it is insane too .....
Why do you think a single basic house in the city costs 5 lifetimes of real disposable income for most people.
Agreed! I tried one last year and the item was supposed to ship in December for us early funders. Nothing yet. Crowding funding will be a thing of the past soon and will be thought of as spam soon. Great idea but execution has been less than respectful.
I'll see your bet and raise you. I'll bet the investors never see a dime of the promised refund. Too bad the crowd funding sites can't be held partially liable for these scams. They initiate these scams, and then walk away to freely move on to the next.
Pre-orders are not investors. Crowd-funding is mot a pre-order. You can pre-order the latest Canon or Nikon camera before it's in the shop, you're just buying a product, and will normally be fully re-imbursed if it fails to appear.
people do not realize when you "fund" a project on Kickstarter (or whichever platform) you are just lending money, at 0% interest, with no collateral or recourse, and assume all the financial risk. all you can do is hope the project goes well
With crowd-funding, you're not necessarily lending money, more like handing it over. You may get a monetary return, but sometimes free or cheaper products produced by the funded entity - eg funding a singer you might get a free CD from the next album, funding a photographer get a free print etc...
Crowdfunding in a nutshell: Basically, you're gambling. Until you have a finished product in you hands, and even then, it won't be exactly the product the manufacturer initially promised it would be.
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