Outbound Aerospace’s journey is a sobering look into the realities of building a hardware startup in one of the most capital-intensive industries. As a founder myself, this story resonated deeply. The company’s ambitious concept for a blended-wing passenger aircraft, designed to revolutionize efficiency and sustainability in commercial aviation, captured imaginations early on. Yet even with a combination of talent, funding, and a promising prototype, the startup found itself grounded due to financial constraints and a misalignment between its vision and market timing.
Let’s dive into what happened, what could have been handled differently, and what lessons founders in any field can take from this.
What Was Outbound Aerospace Building?
Outbound’s original mission revolved around the Olympic airliner, a futuristic design meant to carry 250+ passengers by 2033. Equipped with a blended-wing body, this aircraft promised improved fuel efficiency and lower operating costs. Early prototypes showcased their ability to think outside traditional aerospace constraints. But as interest from commercial aviation cooled, they pivoted toward military applications, specifically with their Gateway UAV, an advanced drone concept designed for data collection and logistics.
Despite promising beginnings, the company faced headwinds common in the aerospace sector: massive capital requirements, long development times, and a tough sell to risk-averse investors. This pivot to defense might have saved the business; instead, it marked the beginning of the end.
Funding Challenges: Why $1.3M Wasn’t Enough
Outbound raised $1.3 million in pre-seed funding from venture groups and individual investors, like Blue Collective and Antler VC. For many software startups, that’s an excellent launchpad. But funding hardware, especially something as ambitious as planes or drones, requires an entirely different scale.
● Cost Example: Prototype Development
- By comparison, Joby Aviation, which works on eVTOL aircraft, raised over $700 million in venture capital before delivering results. Outbound was operating on a shoestring budget in comparison.
● Friction with Market Realities:
- Investors wanted the promise of speed to market and early revenue. Aerospace hardware doesn’t work that way. Contracts with governments and airlines boil down to long negotiations, legal hurdles, and proving tech readiness.
This is where misalignment appeared. Military contracts are notoriously long-term. While interest in the Gateway UAV grew, it required resources to reach a deployable stage. Without access to deeper pockets, Outbound had no lifeline to bridge this gap.
Lessons: What Founders Can Take Away From This Story
Here are critical insights from Outbound Aerospace’s rise and fall:
-
Matching Funding Strategy to Industry Type
Hardware needs big checks, consistently. If you’re tackling capital-heavy fields like aerospace, robotics, or biotech, recognize that $1 million is a starting point, not a solution. Seek investors who understand long timelines (e.g., defense-focused VCs, SBIR grants, government partnerships). -
Pivot Only With Market Validation
Shifting from commercial jetliners to defense drones was logical in theory. The Pentagon showed interest, but it wasn’t solid enough to convince investors waiting for signed contracts. Pivoting needs proof that customers are ready to pay, not just signals of interest. -
Understand How Ecosystems Work
The aerospace market relies heavily on partnerships, government relationships, and certification paths. Outbound needed allies who could share the load. Building partnerships before funding begins can create a stronger narrative during later stages. -
Never Underestimate the Burn Rate
Hardware R&D burns capital like wildfire. Create conservative expense plans, raise more than you think you’ll need, and assume there will be delays. Running out of cash is often the real killer, not the viability of your idea. -
Use Your Founders’ Networks Better
With founders from Boeing Phantom Works, Outbound had incredible credibility. A major missed opportunity may have been leveraging this network earlier to unlock strategic investments or public-private initiatives. As a founder, tap personal and professional networks relentlessly.
Common Mistakes to Avoid as a Hardware Startup
Even the best-prepared founders can make errors along the way. Here are some that resonate with Outbound's story:
- Waiting too long to pivot: Timing is everything. A defensive pivot (in this case, the Gateway UAV) should happen early enough to secure resources for the new strategy. Reacting too slowly leaves no fallback when funds dry up.
- Ignoring smaller, interim opportunities: Outbound might have launched smaller-scale, sellable drone products before committing to big contracts. Achieving smaller wins builds trust with investors.
- Underestimating investor patience: Convincing VCs to back long-term projects requires transparency and clear, milestone-based use of funds. Aerospace durations (often measured in decades) naturally clash with tech investors used to faster results.
- Failing to diversify funding sources: Relying primarily on equity funding limited Outbound’s runway. Loans, grants, or crowdfunding could offer more room for productization.
How to Approach Ambitious, Capital-Intensive Projects (A Guide)
If you’re working on the next moonshots for hardware, take these steps to give yourself the highest chance of success:
-
Develop Relationships First:
Build a community of supporters, investors, industry insiders, potential customers, who believe in the sector you’re targeting. This means engaging proactively through accelerators, incubators, and public events. -
Fundraise in Stages, Not Tiers:
Treat every stage as both incremental and continuous. Instead of setting all-or-nothing goals (like $1 million), structure rounds to fund specific milestones that generate leverage for the next stage. -
Bring Accountability Early:
Demonstrate discipline and long-term viability early on by hiring finance experts or board members with proven aerospace experience. Sophistication builds trust with serious investors. -
Prototype Smartly:
Prefabricated and modular R&D methods can cut costs significantly compared to doing everything custom. Look for ready-made hardware solutions that can be adapted for your vision. -
Be Lean, but Include Contingencies:
Founders in hardware have to push for the lowest-possible costs while demanding a generous buffer for unanticipated problems.
What’s Next for Outbound’s Founders?
Jake Armenta and Ian Lee have made it clear they aren’t giving up on aerospace or innovation. Armenta plans to share designs for Outbound’s five proposed aircrafts publicly in the coming months, potentially as open-source resources for an industry dealing with reduced costs of entry. Meanwhile, Lee is “taking a pause” from leadership while advising other aerospace newcomers.
These types of founders rarely stay idle for long. With lessons learned from Outbound’s collapse, I wouldn’t be surprised to see either of them back within two years, most likely armed with deeper fundraising experience and new allies.
Remember, failure is common in startups. What matters is resilience and how you adapt. Outbound Aerospace’s story is painful, but the knowledge gained in one tough chapter could ignite success in the next.
For founders working in aerospace or drones, GeekWire’s coverage of Outbound Aerospace offers valuable background on their challenges. Alternatively, keep an eye on Jake Armenta’s LinkedIn updates for access to their upcoming designs.
FAQ
1. What was Outbound Aerospace’s initial vision?
Outbound Aerospace aimed to develop the Olympic airliner, a blended-wing passenger aircraft designed to revolutionize efficiency and sustainability in commercial aviation. The goal was to carry 250+ passengers by 2033. Read more about Outbound's concept
2. Why did Outbound Aerospace pivot away from commercial jetliners?
They shifted focus to military applications with the Gateway UAV due to cooling interest from commercial airlines and challenges meeting funding needs for the Olympic airliner. Learn more about the pivot
3. What was the Gateway UAV, and why did it fail to save the company?
The Gateway UAV was an advanced drone for sensor data collection and logistics, aimed at securing contracts from the Pentagon. Despite interest, the lack of signed contracts and required funding led to the company’s closure. Explore Outbound's drone vision
4. How much initial funding did Outbound Aerospace raise?
Outbound Aerospace raised $1.3 million in pre-seed funding from venture firms like Blue Collective and Antler VC, but the funding fell short for the capital-intensive requirements of aerospace hardware. Check funding details
5. What are some common challenges aerospace startups face?
Aerospace startups, like Outbound, struggle with high capital requirements, long development timelines, regulatory hurdles, and friction with risk-averse investors. Discover trends in aerospace innovation
6. Why is the Blended-Wing Body (BWB) design considered significant?
The BWB design promises greater fuel efficiency and lower operating costs compared to traditional aircraft, making it an area of interest for sustainable aviation development. Learn more about blended-wing aircraft
7. How did the lack of customer contracts impact Outbound Aerospace?
Without secured contracts, particularly from military clients, Outbound was unable to attract additional funding necessary for prototype development and scaling operations. More insights on funding challenges
8. What lessons can hardware startups learn from Outbound’s journey?
Key lessons include aligning funding strategies with industry needs, validating market demand before pivoting, managing burn rates conservatively, and leveraging founder networks. Explore startup insights from Outbound Aerospace
9. What are the founders of Outbound Aerospace planning next?
Jake Armenta plans to release Outbound’s aircraft designs publicly as open-source resources for the aerospace community, while Ian Lee is advising startups and taking a leadership break. Follow updates from Jake Armenta
10. What could have helped Outbound Aerospace succeed?
Forming strong partnerships early, diversifying funding sources, and launching smaller sellable products before scaling ambitions could have strengthened their position. Read about strategic improvements for aerospace startups
About the Author
Violetta Bonenkamp, also known as MeanCEO, is an experienced startup founder with an impressive educational background including an MBA and four other higher education degrees. She has over 20 years of work experience across multiple countries, including 5 years as a solopreneur and serial entrepreneur. Throughout her startup experience she has applied for multiple startup grants at the EU level, in the Netherlands and Malta, and her startups received quite a few of those. She’s been living, studying and working in many countries around the globe and her extensive multicultural experience has influenced her immensely.
Violetta Bonenkamp's expertise in CAD sector, IP protection and blockchain
Violetta Bonenkamp is recognized as a multidisciplinary expert with significant achievements in the CAD sector, intellectual property (IP) protection, and blockchain technology.
CAD Sector:
- Violetta is the CEO and co-founder of CADChain, a deep tech startup focused on developing IP management software specifically for CAD (Computer-Aided Design) data. CADChain addresses the lack of industry standards for CAD data protection and sharing, using innovative technology to secure and manage design data.
- She has led the company since its inception in 2018, overseeing R&D, PR, and business development, and driving the creation of products for platforms such as Autodesk Inventor, Blender, and SolidWorks.
- Her leadership has been instrumental in scaling CADChain from a small team to a significant player in the deeptech space, with a diverse, international team.
IP Protection:
- Violetta has built deep expertise in intellectual property, combining academic training with practical startup experience. She has taken specialized courses in IP from institutions like WIPO and the EU IPO.
- She is known for sharing actionable strategies for startup IP protection, leveraging both legal and technological approaches, and has published guides and content on this topic for the entrepreneurial community.
- Her work at CADChain directly addresses the need for robust IP protection in the engineering and design industries, integrating cybersecurity and compliance measures to safeguard digital assets.
Blockchain:
- Violetta’s entry into the blockchain sector began with the founding of CADChain, which uses blockchain as a core technology for securing and managing CAD data.
- She holds several certifications in blockchain and has participated in major hackathons and policy forums, such as the OECD Global Blockchain Policy Forum.
- Her expertise extends to applying blockchain for IP management, ensuring data integrity, traceability, and secure sharing in the CAD industry.
Violetta is a true multiple specialist who has built expertise in Linguistics, Education, Business Management, Blockchain, Entrepreneurship, Intellectual Property, Game Design, AI, SEO, Digital Marketing, cyber security and zero code automations. Her extensive educational journey includes a Master of Arts in Linguistics and Education, an Advanced Master in Linguistics from Belgium (2006-2007), an MBA from Blekinge Institute of Technology in Sweden (2006-2008), and an Erasmus Mundus joint program European Master of Higher Education from universities in Norway, Finland, and Portugal (2009).
She is the founder of Fe/male Switch, a startup game that encourages women to enter STEM fields, and also leads CADChain, and multiple other projects like the Directory of 1,000 Startup Cities with a proprietary MeanCEO Index that ranks cities for female entrepreneurs. Violetta created the "gamepreneurship" methodology, which forms the scientific basis of her startup game. She also builds a lot of SEO tools for startups. Her achievements include being named one of the top 100 women in Europe by EU Startups in 2022 and being nominated for Impact Person of the year at the Dutch Blockchain Week. She is an author with Sifted and a speaker at different Universities. Recently she published a book on Startup Idea Validation the right way: from zero to first customers and beyond, launched a Directory of 1,500+ websites for startups to list themselves in order to gain traction and build backlinks and is building MELA AI to help local restaurants in Malta get more visibility online.
For the past several years Violetta has been living between the Netherlands and Malta, while also regularly traveling to different destinations around the globe, usually due to her entrepreneurial activities. This has led her to start writing about different locations and amenities from the POV of an entrepreneur. Here’s her recent article about the best hotels in Italy to work from.
About the Publication
Fe/male Switch is an innovative startup platform designed to empower women entrepreneurs through an immersive, game-like experience. Founded in 2020 during the pandemic "without any funding and without any code," this non-profit initiative has evolved into a comprehensive educational tool for aspiring female entrepreneurs.The platform was co-founded by Violetta Shishkina-Bonenkamp, who serves as CEO and one of the lead authors of the Startup News branch.
Mission and Purpose
Fe/male Switch Foundation was created to address the gender gap in the tech and entrepreneurship space. The platform aims to skill-up future female tech leaders and empower them to create resilient and innovative tech startups through what they call "gamepreneurship". By putting players in a virtual startup village where they must survive and thrive, the startup game allows women to test their entrepreneurial abilities without financial risk.
Key Features
The platform offers a unique blend of news, resources,learning, networking, and practical application within a supportive, female-focused environment:
- Skill Lab: Micro-modules covering essential startup skills
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- AI Co-founder (PlayPal): Guides users through the startup process
- SANDBOX: A testing environment for idea validation before launch
- Wellness Integration: Virtual activities to balance work and self-care
- Marketplace: Buy or sell expert sessions and tutorials
Impact and Growth
Since its inception, Fe/male Switch has shown impressive growth:
- 5,000+ female entrepreneurs in the community
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- 1,000 unique business ideas for women created
Partnerships
Fe/male Switch has formed strategic partnerships to enhance its offerings. In January 2022, it teamed up with global website builder Tilda to provide free access to website building tools and mentorship services for Fe/male Switch participants.
Recognition
Fe/male Switch has received media attention for its innovative approach to closing the gender gap in tech entrepreneurship. The platform has been featured in various publications highlighting its unique "play to learn and earn" model.