With new FAA rule proposal, U.S. drone companies are poised to take flight

It’s called “BVLOS,” or beyond visual line of sight. Right now, you’re not allowed to fly a drone without a human watching the drone for the duration of its flight (there are case-by-case exemptions and waivers you can get, but these can be expensive and take a long time to obtain). In other words, it’s pretty tricky for companies like Amazon or UPS to regularly make deliveries in any kind of cost-effective way.

The new rule is set to change all that—and start paving the way for companies like a16z-backed Zipline, Alphabet’s Wing, and of course Amazon’s Prime Air to finally start scaling their operations. And it means that all of us may be one step closer to getting our goodies and groceries shipped to us from the sky.

I called up James Grimsley, executive director of advanced technology initiatives for the Choctaw Nation, to talk about the milestone yesterday. Grimsley, who oversees the Choctaw tribe’s drone efforts and the piece of land where companies come to test and fly, was one of the people involved in drafting the report the FAA ultimately used to write the rule, and has been following this closely over the last 20 years of his career.

“This is a transformational rule,” he tells me. “This is a pretty big step.”’

Without boring you with too many of the policy particulars, it’s worth noting that this rule proposal is a market shift in how the FAA has approached regulation for the last 100 years. This rule, Grimsley says, is designed to be adaptable, and be able to shift with the pace of technology—a recognition that when regulation and approvals take too long, the technology at issue risks becoming obsolete by the time it can be implemented. Instead of handing down a prescriptive checklist for companies to follow, the FAA will grant approvals based on “industry consensus standards,” the FAA’s fact sheet says.

“Now we’re going to have a little bit clearer path for the investment community—at least that’s my perspective on it,” Grimsley says.

Though not everyone is going to be thrilled by the FAA paving the way for more drones to start zipping through our skies. The presence of drones has caused alarm in communities—and the buzzing noise has sometimes become a nuisance.

We’re already starting to see how these new BVLOS rules will play out. In Dallas, Alphabet subsidiary Wing and the startup Flytrex have been working closely with the FAA for a collaboration—running an automated delivery system in the same areas and showcasing how multiple companies can share data to operate in the same airspace at once without the need for humans to get involved. 

The new rule is expected to go into effect sometime in early 2026, but companies are already gearing up for it.

“This creates the foundation for truly scalable drone operations in the U.S.,” says Alex Norman, head of global flight operations & services at the drone company Matternet.

Podcast drop… Fortune just dropped the second episode of the Term Sheet Podcast! This week, Allie interviews Taylor Otwell, founder and CEO of Laravel, the company that helps power the CMS Fortune builds the Fortune 500 and our other lists in. Together they discuss Laravel’s rise as an Arkansas-based tech company and Taylor’s early decisions as a founder, and the passionate Laravel community. Also in this episode: Figma’s successful IPO, OpenAI’s latest funding round, and the deal of the week: Joby Aviation.

Jessica Mathews
X: @jessicakmathews
Email: jessica.mathews@fortune.com

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VENTURE DEALS

– Clay, a New York City-based AI go-to-market development platform, raised $100 million in Series C funding. CapitalG led the round and was joined by Meritech Capital, Sequoia Capital, First Round Capital, BoxGroup, Boldstart, and Sapphire Ventures.

– Rillet, a New York City-based AI-powered enterprise resource planning company, raised $70 million in Series B funding. A16z and ICONIQ led the round and were joined by Sequoia, Oak HC/FT, and others.

– Lyric, a Sunnyvale, Calif.-based AI-powered supply chain decision making platform, raised $43.5 million in Series B funding. Insight Partners led the round and was joined by Primary Venture Partners, Permanent Capital Ventures, VMG Partners, PSP Growth, and NewBuild Venture Capital.

– Pantomath, a Cincinnati, Ohio-based AI-powered automated data operations platform, raised $30 million in Series B funding. General Catalyst led the round and was joined by existing investors Sierra Ventures, Bowery Capital, and Epic Ventures.

– NG.CASH, a São Paulo-based digital bank, raised $26.5 million in Series B funding. New Enterprise Associates led the round and was joined by Quantum Light, Monashees, Andreessen Horowitz, and others.

– Kontext, a San Francisco-based advertising platform for AI chatbots and Generative AI apps, raised $10M in seed funding. M13 led the round and was joined by Torch Capital and Parable VC.

– OLarry, a San Mateo and San Jose, Calif.-based AI-powered tax firm, raised $10 million in Series A funding. TTV Capital led the round and was joined by Walkabout Ventures and Marin Sonoma Impact Ventures. 

– August, a New York City-based AI platform designed for midsize law firms, raised $7 million in funding. NEA and Pear VC led the round and were joined by Afore Capital and others.

PRIVATE EQUITY

– Arax Investment Partners, backed by RedBird Capital Partners, acquired Summit Wealth Strategies, a Chesterfield, Mo.-based boutique investment advisor. Financial terms were not disclosed.

– Hoffman Family of Companies acquired Elmer Chocolate, a Ponchatoula, La.-based chocolatier. Financial terms were not disclosed.

– Prosperity Partners, backed by Unity Partners, acquired Pipaya, a Vienna, Va.-based transaction services firm. Financial terms were not disclosed.

– Providence Equity Partners acquired a majority stake in Global Critical Logistics, a New York City-based live events and luxury goods logistics company, from ATL Partners. Financial terms were not disclosed.

EXITS

– Generous Brands, backed by Butterfly, acquired Health–Ade, a Los Angeles-based kombucha brand, from Manna Tree and First Bev for $500 million.

– Francisco Partners agreed to acquire Elite, a New York City-based legal tech company, from TPG Capital and Thomson Reuters. Financial terms were not disclosed.

PEOPLE

– Kainos Capital, a Dallas, Texas-based private equity firm, hired Ryan Horstman as CFO and Peter Schnuck as a vice president. Horstman was previously with Vortus Investments, and Schnuck was previously with Sunrise Strategic Partners.

– Sorenson Capital, a Lehi, Utah-based venture capital firm, promoted Eric Hilton to partner.