Kiwi drone startup Dotterel Technologies has raised $1.06m from Sydney-based Jelix Ventures, which specialises in backing early-stage companies.

Jelix now has an 11.45 per cent stake in Dotterel.

Other investors include managers, Sir Stephen Tindall's K1W1 fund, Crown agency NZVIF, Techstars Australian Defence Accelerator and Auckland University's commercialisation arm Uniservices (which has also had recent wins with Soul Machines and Power-by-Proxi).

Dotterel makes a shroud that dampens noise from a drone's propellers and eliminates the risk of injury from their blades.

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It also makes technology for recording audio via a drone - something that's ordinarily impossible over the noise generated by the props.

Dotterel has the movie-making and defence industries in its sights.

Co-founder Shaun Edlin says his company's shroud means a drone causes less disturbance on set and is less of a health and safety issue.

The US$70b drone market is pegged to grow to US$100b by 2020. While the market is crowded, Edlin says Dotterel has no direct competitor in its noise-reduction niche - which he says is worth tens of millions a year in the film-making market alone.

Down the track, once drones are used for ferrying pizzas and other goods to customers, he sees home deliveries as another target market for Dotterel's noise-dampening tech.

Edlin won't comment on his company's financials, other than to say the three-year-old, eight-person startup is still making a loss and at the very early stages of commercialising its technology.

Dotterel currently makes its own drones, but its long-term plan is to license its shroud to other drone makers.

"Taking the drone out of drones" - Dotterel co-founders Shaun Edlin and Mat Rowe.

A key breakthrough came earlier this year when Dotterel inked a partnership deal with the Massachusetts Institute of Technology.

MIT acoustic engineering students get to work on a real-life product, while Dotterel gets free R&D to supplement its in-house efforts.

Edlin says Dotterel's shroud works by diverting noise upward. It also contains noise-dampening materials and houses an array of microphones that work with Dotterel software to filter out propeller noise from a recording

The company's $1m raise follows a $500,000 round late last year.