DJI Phantom 3 drone release
DJI, the Chinese consumer drone manufacturer, is said to be looking for hundreds of millions in investment valuing the company at $10bn (IBTimes UK)

The drone industry is one of the hot topics in the technology world at the moment and Chinese firm DJI is the leading manufacturer and is now seeking hundreds of millions of dollars in funding giving it a valuation of $10bn (£6.74bn).

The news of the funding round comes from anonymous sources speaking to the Wall Street Journal who say that high profile venture capital funds such as Accel Partners and Kleiner Perkins Caufield & Byers are in discussions to fund the helicopter drone manufacturer.

While DJI has confirmed it is in talks with investors it has declined to comment on the level of investment or the potential valuation.

The funding could help DJI focus efforts on the commercial and industrial application of drones, an area seen as having huge potential in the coming years.

The company, which was founded by CEO Frank Wong while he was in university in Hong Kong in 2006, has relied almost entirely on cash flow to grow the business to date, though the Journal reports that it has received some funding from Sequoia Capital previously.

DJI, the world's largest manufacturer of what are known as consumer multirotor drones, is on course to generate revenues of over $1bn in 2015, over eight times the $130m it earned in 2013.

The company produces a range of drones for the consumer market and recently launched its Phantom 3 drone in London which feature 4K video recording capabilities. The drones are popular among enthusiasts as well as journalists, photographers and filmmakers allowing them to take pictures and video while remotely controlling the devices.

Clones

While DJI is the leading manufacturer of drones at the moment, it is likely to see increased competition from companies looking to cash-in on the drone craze and these will likely undercut DJI in terms of price.

DJI has sold tens of thousands of its Phantom drones to date, each of which sell for in excess of $1,000.

Some believe that while manufacturers like DJI - and its closest rival 3D Robotics - may see initial success, it is going to be software companies which will be the real winners at the end of the day by creating a platform for drone manufacturers, just as it was in the PC industry.

"Companies like DJI right now have good momentum, but they're hardware makers. Next year and the year after that, you're going to see hundreds of DJI clones," said Chris Dixon, a partner at venture firm Andreessen Horowitz which has invested in a company creating software for drones. "I don't think long term that's a good bet. Software is going to eat drones."

Regulation

While the excitement around consumer drones continues to grow as prices comes down, there are still huge obstacles in the way of these unmanned aerial vehicles becoming a mainstream product.

The biggest of these is regulation. As we have shown, the locations in the UK where you can legally and safely fly a drone are very limited, particularly in built-up urban areas.

Regulators in the US and the UK are closely monitoring the use of these devices and this has led to a stifling of innovation with Amazon left frustrated at its attempts to use drones for deliveries.

As we have seen this week in The Netherlands, drones do crash and many believe that just a single high-profile incident will see even heavier restrictions put in place and effectively kill the consumer drone industry.