From Arc Boat to startups

During the last week of November, the Arc, an electric boat startup, successfully raised $30 million during the last round of funding. As a company founded by former SpaceX engineer, Ryan Cook, it is planning to sell its first electric boat-Arc One- at $300,000 as soon as possible. Furthermore, it has high ambition, which is to continuously produce high tech electric boats and supply them to the market. But what does this show about the startups?

Firstly, the founding team is the key. It can successfully raise a large amount of money in such a short period of time, because it has a former Space X engineer as one of the founders. Ryan Cook’s experience, knowledge and career successes seem like the success keys for investors. They would give extra credit to this startup. So, in order to successfully raise money, an experienced team with reputation and members constituted by one or some experts in this field is necessary.

The second key factor is the market, especially the total available market and serviceable available market (SAM). For investors, electric and automatic boats not only have a large total available market, but as well as a tremendous serviceable available market. There is a market for electric boats because none of the traditional boat manufacturers started to produce in this segment. Additionally, there is a large Serviceable available market, because it is much easier for boats to be electric and automatic without significantly increasing the cost of production.

The third key is production and technology. In the case of the Arc boat, its electric boat technology is hard to develop but is possible to be developed. In addition to this factor, it can be developed with limited resources in a limited period of time. So, a technical barrier to entry will be immediately formed. Venture capitalists and investors would love to invest in this type of startup, because the risk of failure is relatively low and there is going to be immediate return.

So, if you would like to start your own company, make sure to address the three key elements: technology/production, market and team, to successfully raise funding from different investors. Having reputation, professional knowledge, identifying SAM and being able to develop a technology with limited resources to form barriers to entry are the key factors for modern day startups to attract investments.