Elroy Air, a heavy lift drone cargo company, announced in June that it was going public via SPAC at a $1 billion enterprise value.

If you're checking the date on this newsletter to make sure it says 2026 and not 2022, that's completely reasonable.

eVTOL SPACs defined one of the worst chapters in recent capital markets history. Joby, Archer, Lilium, Vertical Aerospace: multi-billion-dollar valuations, non-binding order books, no revenue, and years of cash burn while timelines slipped. Lilium delisted entirely.

So if your instinct is to run after reading this headline that is understandable.

Elroy's technology, mission, and leadership are differentiated from the cohort that came before. CEO Dr. Andrew Clare is one of the more credibly pedigreed executives in autonomous aviation, with a background running the CTO role at Nuro and overseeing production programs at Tesla.

But the financing decision is a different story. In a moment when defense-tech companies have more access to private capital than at any point in history, Elroy chose a route with a documented track record of value destruction and structurally expensive terms. That's the tension we're working through today.

Elroy Air was founded in San Francisco in 2016 by David Merrill and Clint Cope, both veterans of 3D Robotics, the consumer drone company that briefly rivaled DJI before losing the market to China. The founders initially explored air-taxi concepts before making a deliberate pivot to autonomous cargo. The logic: avoid passenger-carrying certification and solve a logistics problem that doesn't require changing how people get to work.

The real inflection came in 2020. Elroy joined the U.S. Air Force's Agility Prime program and simultaneously shifted from all-electric propulsion to a hybrid-electric turbogenerator powertrain. Defense access combined with infrastructure-independent range is the foundation every subsequent milestone is built on. The turbogenerator-hybrid Chaparral C1 flew for the first time in November 2023. The first autonomous point-to-point cargo delivery followed in December 2025.

In January 2025, Elroy brought in Dr. Andrew Clare as CEO and moved founder David Merrill to Executive Chairman. Clare previously served as CTO at Nuro and held production roles at Tesla. The mandate was clear: take the aircraft from prototype to production.

Going into the SPAC announcement, Elroy had raised roughly $100 million in private capital from investors including Lockheed Martin Ventures, Shield Capital, and Marlinspike.