UK's Vertical Aerospace secures up to $850m funding

Vertical Aerospace, a UK-based maker of electric vertical takeoff and landing aircraft listed in the US, said it has agreed in principle to a financing package of up to US$850 million to fund flight testing, certification work, and initial production of its Valo aircraft.

The company said it has raised US$50 million in equity and expects an additional US$30 million, bringing working capital to around US$160 million to support operations through 2026.

Vertical said the broader package could provide access to up to US$800 million through 2027 and later, including funding for flight testing and certification.

It said the financing was arranged with investors including Mudrick Capital Management, which extended and added to its convertible debt, and Yorkville Advisors Global, which offered around US$250 million in convertible preferred shares.

🔗 Source: The Economic Times

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Implications, context, and why it matters.

Vertical’s earlier funding deal followed default risk and set up a potential shift in control

This financing package reads like a rescue round rather than a standard push for growth.
It followed a November 2024 agreement in principle through a non-binding term sheet involving Vertical Aerospace, majority shareholder Stephen Fitzpatrick, and primary creditor Mudrick Capital Management (an investment firm). The talks came after funding negotiations and a prior default notice from Mudrick, according to FlightGlobal 1.
The deal centered on converting about $130 million of convertible notes (debt that can later be converted into company shares) into equity at $2.75 per share. That price covered roughly half of the outstanding amount 1.
Completion of the debt-for-equity swap would have made Mudrick Capital the largest shareholder with a 71% interest. Founder Stephen Fitzpatrick would stay on the board in a strategic role 1.
The new capital backs the company’s “Valo” aircraft, which replaces the VX4 prototype with a redesigned platform shaped by the piloted test program and customer feedback 2.

Vertical’s survival playbook offers lessons for the capital-intensive tech industry

Vertical’s path offers one route for hardware startups with high cash burn where lenders can take majority ownership to keep the business alive 1.
The approach differs from the usual venture capital playbook and it matches a harsher funding market.
Revenue plans go beyond aircraft sales through manufacturing and supplying battery packs over each aircraft’s lifetime 3.
Plans for seven certification aircraft in the UK support a push that Vertical says would return the UK to designing and manufacturing new whole commercial aircraft for the first time in more than 30 years 2.