Christchurch based Martin Aircraft Company (MAC) recently demonstrated a prototype of their personal jet pack at a leading US airshow in Wisconsin. The demonstration was the culmination of 20+ years work by former Otago University student Glenn Martin. The demonstration flight below is a little underwhelming due in part to a last minute pilot change. Extended demonstration footage is available here.
Martin Jet Pack Quick Stats
- Weight: 115kg (254 lbs)
- Height: 5ft
- Width: 5ft
- Flight time: 30 mins
- Cost: $100,000 (US Dollars)
- A condition of purchase includes undertaking a MAC training and certification process.
- more
MAC speculates that there could be a market for up to 60,000 jet packs as recreational toys in the next eight years. The company acknowledge implementing the production capacity to meet this demand would be a challenge. At $100,000 US a unit this equates to a potential $6 billion opportunity.
Over the last 4 years Wellington based venture capital firm No 8 Ventures has been backing the project. No 8 founder Jenny Morel thinks the MAC need $20 million to invest in production facilities, staff and IP protection. Raising venture capital is hard work and finding this amount of money at this stage of the company’s life in New Zealand will be a challenge.
How many jet packs does MAC need to sell in 2016?
Based on a post money valuation of $30 million (i.e. in return for investing $20 million you get two thirds of the company) and the following assumptions
- Required return on investment: 10x
- Future price/sales valuation ratio: 0.94 (aerospace/defense industry average)
- Price per unit: $100,000 US
- Ignoring potential dilution or follow on investments
Implies annual sales in 2016 of ~3,200 units. Based on today’s price this is $320 million in annual sales or ~5% of the potential recreational market (total market not annual sales) identified by MAC.
Post money valuations $25 million (80% of the company) and $40 million (50% of the company) imply 2016 annual sales of approximately 2,700 and 4,300 units respectively.
Note: These are rough back of the envelope calculations based on subjective estimates of uncertain variables.
My initial reaction was that these seemed like large numbers and given the technology, production, compliance and sales challenges ahead rasing $20 million will be a hard sell. The counter argument is that in 10 years time the marquee event at the X Games could be jet pack racing and/or I am flying to work at Spacely Space Sprockets wearing my Martin Jet Pack.
Whatever happens good luck to Martin Aircraft Company and I would love to try the jet pack out.
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