The Sky's Not the Limit: Lilium's Turbulent Flight

We're taking a detour from our usual AI playground to explore the wild world of DeepTech. Today's flight plan? A journey through the turbulent skies of Lilium, the German aerospace company that's been making waves - or should I say, air currents?

Now, you might be wondering, "Why all this fuss over a company I've never heard of?"

Well, buckle up, because we're about to take a deep dive into the world of electric vertical take-off and landing (eVTOL) aircraft.

Trust me, it's electrifying stuff!

Electric Dreams and Empty Pockets

Cue the dramatic music!

Last week, Germany decided to keep its wallet firmly shut when Lilium came knocking for a €100M loan.

This decision was after 650 of startup founders and enthusiasts signing up a letter urging government for the support and many claiming it would do "great damage to the deep tech ecosystem" if the government does not support it.

Some others suggested Lilium should pack its bags and jet off to China , Asia, or the USA, where investors would supposedly welcome them with open arms.

Never mind that their SPAC is already lounging on Nasdaq, in USA.

Lilium decided to take the express route to the stock market in 2021, hopping aboard the SPAC train. For those not fluent in finance-speak, SPAC stands for "Special Purpose Acquisition Company," or as I like to call it, "Shortcut to Public Also-ran Company."

They merged with Qell Acquisition Corp, and voilà! Lilium was public faster than you can say "vertical take-off."

Now, if you're thinking of time-traveling back to 2021 to buy Lilium stock, I'd advise against it (also time travel isn't invented yet - but i am working on a SPAC for that ?? ). Like many SPAC IPOs, Lilium's stock price has taken a nosedive from its initial $10 to less than fifty cents.

Ouch!

That's not the kind of vertical movement they were aiming for.

But then as i mentioned before, a company goes via a SPAC route to the IPO because they would not qualify otherwise. No wonder then, SPAC companies are a a disaster in the market .

But hey, in the world of startups, it's not about how hard you fall - it's about how high you can bounce back up. And Lilium is certainly trying to reach for the stars... or at least the stratosphere.

A few days before this decision, Lilium's CEO, Klaus Roewe, made an impassioned plea on LinkedIn . Since it was in German, i am showcasing a LinkedIn translated version here, but feel free to read the original.

From Zero to eVTOL: The Lilium Lowdown

So, who exactly is this Lilium that's got everyone's propellers spinning?

Lilium Aviation , born in 2015 in the land of bratwurst and BMWs, is on a mission to revolutionize air travel. Their grand plan? Electric planes that can take off and land vertically and fly short distances. The vertical take-off bit (eVTOL) is crucial - it means Lilium can plonk its landing pads in densely populated areas without needing a runway the size of Rhode Island.

In May 2019, Lilium's first prototype spread its wings (or should we say, fired up its jets?). This five-seater eVTOL promised the holy trinity of air travel: speed, eco-friendliness, and affordability.

Lilium's crystal ball (back in 2021) shows a rosy future: by 2027, they envision 1,000 jets zooming around, with 30,000 tickets sold leading to revenue of $5 Mn per aircraft .

The Bailout Boogie: A Walk Down Memory Lane

Before we dive deeper into Lilium's financial turbulence, let's take a quick pit stop in Bailout Town.

Population: Too Big To Fail .

Remember 2008?

While you were busy trying to figure out if your MySpace was still cool, the global economy was having a meltdown of epic proportions. Governments worldwide were scrambling to prevent a full-blown economic apocalypse. In the US, they whipped out the big guns: the $700 billion Troubled Asset Relief Program (TARP).

It was like a financial defibrillator, shocking life back into banks, automakers, and insurance companies.

Meanwhile, the Federal Reserve was also pumping money into the economy like it was going out of style, expanding its balance sheet to over $4 trillion.

That's a lot of zeros, folks!

Was it worth it? Well, in the short term, it was like giving the economy a triple espresso shot. Financial markets stabilized, and we dodged the Great Depression 2.0 bullet.

Phew!

But the long-term effects? Still positive, but things do get a bit murky.

On the bright side:

1. Most of the TARP money boomeranged back to the government, with a little profit on top.
2. The auto industry lived to drive another day, preserving millions of jobs.
3. The financial system not only survived but eventually started flexing its muscles again.

However, it wasn't all rainbows and unicorns:

1. It created a moral hazard - encouraging future risky behavior.

2. Income inequality grew, with Wall Street recovering quicker than Main Street.

3. Public trust in institutions eroded faster than a sandcastle at high tide.

Across the pond, Europe was dealing with its own financial fiasco. Countries like the UK, Germany, and France were playing financial whack-a-mole with their own bailout programs.

But Europe had an extra twist in its economic pretzel: the sovereign debt crisis. Suddenly, entire countries like Greece , Ireland , and Portugal needed bailouts. These came with strings attached, sparking heated debates about solidarity and fiscal responsibility within the EU.

That's a long talk - should be do bailouts? Yes, if we must. Just like a Chemo.

So, when we talk about bailing out Lilium, we're not just discussing pocket change. We're dipping our toes into a complex ocean of economic philosophy, public policy, and the very nature of innovation in a capitalist system.

Lilium's Flight Plan: Are We There Yet?

Now, let's circle back to our friends at Lilium. Where exactly are they on their journey to revolutionize air travel?

Spoiler alert: They're not quite ready for boarding yet.

Their seven-seater eVTOL aircraft is still in the "coming soon" phase. Think of it as the aviation equivalent of "the check is in the mail."

But fear not! Progress is happening:

* The MSN1, Lilium's first jet, is in the final stages of assembly near Munich.

* Construction of the MSN2 is already underway.

Wait, there's more! Lilium isn't just playing in its own backyard. They're going international, baby!

1. They've inked a $1 billion agreement with Azul , a major Brazilian airline, for 220 Lilium Jets.
2. They've partnered with eVolare , a subsidiary of a major UK helicopter and private jet operator.
3. They've even set up shop in Shenzhen , positioning themselves in China's tech hub. (So, now you get the reddit "Lilium, go to China ")

It's an ambitious flight plan, no doubt.

But before these electric birds can take to the skies, they need to jump through more hoops than a circus lion. Lilium is working with the European Union Aviation Safety Agency (EASA) and the U.S. Federal Aviation Administration (FAA) to secure type certification for their Lilium Jet.

Promised timeline? 2024.

That's practically tomorrow in aviation terms! And let's not forget, nothing gets done in the last weeks of December. So really, they have about 4-5 weeks.

No pressure, folks!

Lilium's Secret Sauce: Jets, Batteries, and Dreams

Now, let's talk tech.

Because what's a DeepTech company without some mind-bending innovation?

Note: I'm no aviation expert ?? and hence this part is my interpretation as i understand it. Bear with me. Happy to be corrected if anything is wrong here.

While most eVTOL companies are sticking to open rotors (think fancy drones), Lilium is rocking 36 electric ducted fans. They call them "jets" (speaking as a layman: Jet engines generate thrust by expelling a high-speed stream of hot, pressurized gas from the rear of the engine) because it sounds cooler, and let's face it, in the startup world, cool is currency.

The potential perks? Quieter operation ( if you are taking off from office buildings - your neighbors will thank you) and better aerodynamic efficiency (Mother Nature will thank you).

But here's the rub: it's also more complex. While competitors like Joby Aviation are playing it safer with more conventional designs, Lilium is going all-in on innovation. It's a high-risk, high-reward strategy. If it pays off, they'll be the toast of the aviation world.

If not... well, let's just say it could be a bumpy landing.

And let's not forget about the batteries! Lilium is using lithium-ion cells with silicon-dominant anodes, similar to what you'd find in high-end electric cars. They're promising a range of 255 km, slightly edging out their US competition.

Keep in mind that Joby has conducted over 10,000 test flights without significant battery degradation, while Lilium has just begun testing its full propulsion system. Lilium's technology is like a promise written in the sky - beautiful, inspiring, and yet to be fulfilled.

Only time will tell if their bold strategy will help them fly high or leave them grounded.

The First Law of Holes: When to Stop Digging

Now, let's talk about a piece of wisdom older than your grandpa's favorite armchair: the First Law of Holes .

It goes like this:

"If you find yourself in a hole, stop digging."

Simple, right?

Well, apparently not for everyone.

The biggest head-scratcher in this whole Lilium saga is the lack of answers to some pretty crucial questions. Neither the CEO nor the cheerleaders for the €100M loan addressed the elephants in the room.

And boy, are there some big elephants!

Let's break it down:

1. Lilium has already gulped down a whopping $1.5 Bn. How much more dough do they need before we see a product that doesn't just exist in PowerPoint presentations?

2. Would another €100 Mn really make a difference? Or is it just delaying the inevitable?

3. How does Lilium stack up against the competition?

4. Will Lilium ever turn a profit?

None of these hard-hitting questions made an appearance in the emotional appeal for funding.

It's like going to a job interview and talking about how much you love the company's coffee machine instead of your qualifications.

Now, don't get me wrong. I'm all for Germany boosting its startup scene. In fact, let me emphasize it:

I do firmly believe that Germany (and Europe) should do more to boost startups.

But maybe, just maybe, Lilium and its supporters should make their case based on cold, hard facts and a rock-solid business plan. You know, instead of tugging at heartstrings with all that drama of veiled threats that not helping will cause "great damage to the deep tech ecosystem".

In the startup world, passion is great. Innovation is fantastic. But at some point, you need to show that your great idea can also be a great business. Otherwise, you're not a startup; you're a very expensive hobby.

So, Lilium, for whatever it's worth, here's some free advice: When you're asking for money, lead with your strengths, not fears. Show us the path to profitability, not just pretty prototypes.

Convince us that you're not just digging a deeper hole, but building a launchpad for something truly revolutionary.

Until next week...

And there you have it, folks!

A deep dive into the world of electric aviation, with a side of economic philosophy and a sprinkle of startup wisdom. Did this deviation from our usual AI focus tickle your neurons? Or would you prefer we stick to the binary beauty of artificial intelligence?

And remember, if you found this newsletter valuable, spread the love (and the knowledge)! Share it with your network and help our little community grow.

Until next week, keep your heads in the clouds and your feet on the ground!

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